After getting hundreds of complaints about price gouging in Connecticut, state officials there have recently announced a new legislative effort to try and tackle the problem.
Businesses are already prohibited in the state from price-gouging, they cannot look to excessively raise of their prices on goods in advance of any sort of imminent market disruption like COVID-19. But still, people say they are seeing unreasonable prices for things like eggs, toilet paper, and hand sanitizer and over 700 complaints have been made for this issue to the state.
According to lawmakers, they say they need better legislative tools to stop this problem.
“Our price gouging law is limited and really only gives us the immediate opportunity to go after the first link in the chain, the retailer,... We don’t yet have the authority to go up the chain.” - CT AG Tong
If they get the new changes passed then that would give authorities more power to go after not only retailers, but also manufacturers and wholesalers too.
The price gouging issue is a controversial one for many, despite being closely tied to supply and demand. For this reason it is possible that those anti-price gouging restrictions can have negative and unintended consequences.
The United States Chamber of Commerce previously determined that these anti-gouging rules might end up hurting individuals more than helping them in times of need.
This is because anti-gouging laws are known to possibly fuel more hoarding and it might discourage businesses from looking to boost their supply which would further help to ease the problem of a shortage.
Through their investigations in CT they found that often retailers themselves would be making reports of the high prices they were required to pay for obtaining different items. The state officials would look to place pressure on wholesalers but this had little effect and now they want more power to have that impact.
They will be holding a public hearing on that bill this week and it is expected to receive bipartisan support, as they're painting this as a measure to keep families safe and suggesting that this new power will help businesses, hospitals, and frontline workers, making sure they get the supplies they need. However, it just might end up giving the state the power to make things worse by fueling those unintended consequences in the market when they seek to interfere.
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