An ethical perspective on price gouging
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In the aftermath of Hurricane Sandy, which hit the greater New York area in November 2012, the news was full of examples of price gouging—gasoline for $4 per gallon, a loaf of bread for $7, double rates for motel rooms, and on and on. This is a frequent response by retailers in the wake of natural disasters. The retailers involved (and not a few economists) argue that raising prices is a natural response to supply shortages and it is their right as business owners or managers to set their prices at levels that serve their interests. Many others (including politicians who favor laws against price gouging in such situations) take a dim view of what they see as taking advantage of consumers caught in vulnerable circumstances where choices for needed products and services are few. What do you think?
Read the background material in the Presentations file for this module and Futrelle, D. (2012). Post-Sandy price gouging: Economically sound, ethically dubious. Time (November 2). Retrieved March 31, 2014, from http://business.time.com/2012/11/02/post-sandy-price-gouging-economically-sound-ethically-dubious/
Then search the Internet for examples of price gouging. Apply that material to the pricing decisions discussed in this Case in answering the following questions:
1.What ethical principles support, respectively, raising prices in the wake of natural disasters and opposition to such increases?
2.Which approach would you advise a convenience store owner to follow in an area hit by a tornado or hurricane?
Write a 2- to 3-page paper (not counting cover and reference pages) explaining your analysis and advice. Reference any sources of information about normative ethics principles and give relevant examples.
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Solution Summary
This solution describes an ethical perspective on price gouging.
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1. In a situation of this nature, it appears that one of the ethical principles that supports raising prices in the wake of natural disasters would be consequentialism. This is due to the fact that raising prices in the wake of natural disasters results in a positive or beneficial outcome for the business owners, that have the right to increase the profitability of their business is by any legal means at their disposal. I think that an ethical principle that is in opposition to raising prices in the wake of natural disasters would be utilitarianism, due to the fact that raising prices and natural disasters would not provide the greatest good for all of those involved in the situation. This is due to the fact that the business owners would greatly benefit from raising the prices due to the fact that they will exponentially increase their ...
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