Why the Government Should Not Impose Price Controls

Facing surging prices amid a global pandemic, Kansas attorney general Derek Schmidt told reporters last week that his office intends to prosecute profiteers and “prevent opportunistic greed from overcoming the public need for necessary virus-response products and services during this time of emergency.” New Jersey’s lead prosecutor, Gurbir Grewal, struck a similar tone, warning corporations that “price-gouging laws will be strictly enforced to protect consumers trying to stay safe and take measures to protect themselves and their loved ones from the spread of the disease.” In both cases — and many others springing up in states and localities across the country in response to the coronavirus outbreak — legislators and prosecutors misunderstand how prices are set in a competitive market.