Sun | Apr 5, 2020

King: Price-gouging law will worsen shortages

Published:Friday | March 27, 2020 | 12:26 AM

The anti-price-gouging law being implemented by the Government to protect consumers will worsen shortages, economist Damien King has said.

King, who lectures at The University of the West Indies, Mona, has argued that the measure will fail to stop high prices.

“Higher prices discourage the first buyers from hoarding and incentivise suppliers to ramp up, which reduces the scarcity,” King said, reacting to a Gleaner news report on details of the order laid yesterday.

“Without that, formal sellers sell quickly and the informal price-gouge anyway,” he further said.

King appeared not surprised about the revelation by Floyd Green, state minister in the Ministry of Industry, Commerce, Agriculture and Fisheries, that “there were unexplained rises in prices”.

He argued that price rises with scarcity.

Retailers found guilty of price-gouging face a fine of up to $2 million as the Government moves to protect consumers desperate for food and cleaning agents amid the outbreak of the novel coronavirus here.

Meanwhile, King is declaring that there will be a period of hardship as COVID-19 and the displacement it has brought sweeps the country.

“Even with the finance minister’s well-designed handout programme, make no mistake that we are in for a period of hardship. If production falls, then so, too, must consumption as we cannot have what is not produced.

“But handouts will mitigate economic contraction,” he said.