I dislike the term “price gouging” since it automatically attaches negative connotations to the practice. Price discrimination would indeed be more scientifically accurate, and most economists would agree that there is nothing inherently wrong with charging different customers different prices due to differing demand curves. However, the general public don’t quite see it this way and has a moral repugnance towards “negative” practices of price discrimination such as Amazon charging regulars more by use of stored cookies (now stopped) or Apple charging more desperate people more for early iPhones (they apologised and offered rebate vouchers). However, the “positive” practices of price discrimination are ignored: lower fares for youngsters and OAPs, etc. and certain cases where it is simply “common practice” - hardcover books. I find it kind of odd that people would have double standards like this.
Now the ethical dilemma becomes murkier in situations such as this: after a flood, people have a greater need for supplies so is it justified for energy companies to raise prices in response to the changes in demand (as long as they don’t collude)? It would certainly provide incentives for more competitors to enter into the market, thereby increasing total supply in the long-run but it does also mean that the current supply is distributed rich first, poor last. What’s “fair”?
