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Price-Gouging is a pricing strategy in which the seller raises the prices of essential goods and services to maximize profits during a time when substitute products are unavailable. But in a time of crisis, such as a natural disaster, should sellers prescribe to this strategy? Should New York vendors after Hurricane Sandy hit NJ in Oct 2012 be able to charge $9 for a bottle of water that was only about $1 the previous day?


According to Sage Brief Guide To Marketing Ethics, In some communities, price gauging during natural disasters is outlawed. So, obviously, my answer is no: sellers should not prescribe to price-gouging in areas that have strict laws in place. Cut and dry.


But when the issue is not a matter of law, and one of ethics, we must look at the seller’s intent. If the seller’s intent is, 1) to limit the availability of a product or service only to those who can afford it, or 2) to maximize his profits with little concern of how it impacts the buyer, then I feel that price gouging is clearly unethical and I do not agree with the strategy.


However, if the seller is justifiably selling the goods at a higher price, because 1) the costs associated of getting such goods into the devastated community are higher, or 2) because he is purposely discouraging hoarding (where people buy-up all the goods in excess and prevent others from purchasing supplies), then I feel price gouging is ethical and I’m okay with the strategy.


The difficult issue, of course, is that it's difficult to determine what the seller’s intent truly is.  


Disasters like Hurricane Sandy that washed up NJ in 2012, the tsunami and earth Quake that destroyed Japan in 2011, and Hurricane Katrina that washed-away New Orleans in 2005, have all brought on instances where price gouging was of great concern and debate. 


People are known to do some truly beautiful things for one another during a time of need, but there will always be a few douche bags in the world (as long as they know they can get away with it). When the next storm hits, perhaps these douches will be the first ones to get washed down stream or blown away. That’s what I think! How about you? Do tell. —Bobby Borg.



NOTE: 12/12/12 Hurricane Sandy Benefit Concert: 

On the note of people who do beautiful things, according to Pop Blend, John Sykes, New York Knicks owner James Dolan and super producer Harvey Weinstein announced this morning that a slew of artists including Paul McCartney, The Who, Billy Joel, Bruce Springsteen, Jon Bon Jovi, Alicia Keys and Roger Waters have all already agreed to participate in the event that’s being dubbed “12-12-12” at Madison Square Garden.



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Please attribute to Bobby Borg. Copyright ©2006, 2012 by Bobby Borg. All rights reserved.