The price gouging laws in Texas and other states have created numerous debates amongst buyers and sellers. According to economists, price gouging is not entirely bad. However, this does not mean that it is good. This means that price gouging laws in Texas could have various benefits and demerits.
Consider the case of masks. If there is a sudden increase in the price of masks, business in Texas that had already purchased the masks are likely to make a higher profit that normal. As a result, price gouging in this case turns out to be beneficial as it aids in profit-making. Buyers are likely to change their buying habits with price gouging. Primarily, majority of the buyers will minimally purchase the goods. The outcome will be availability of goods in the market which prevents the problem of shops being understocked.
Along with the benefits pointed out above, there are various shortcomings that emerge as a result of price gouging. The first one is loss of consumers either immediately or after a certain period. Buyers will consider other stores, whether in Texas or other cities, that have reasonable prices for a similar commodity. The other demerit is reduced sales or lack of sale altogether especially if the commodity is a secondary product and the consumers are facing tough economic times. All this means that the in Texas would be affected should there be an adoption of price gouging.
The above analysis showcases that price gouging is two faced as it comprises both the merits and demerits. However, ethical and legal practices are necessary in all market environments hence the need of having standard and reasonable pricing of commodities. It ensures a win-win situation between the buyer and the seller.