Location
The term price gouging is often used to describe prices that are spiked unreasonably high simply because customers are stuck at a particular location such as an airport, event or remote area. In this case, price gouging is possible because a seller has a monopoly. For example, the only coffee shop at an airport may charge high prices because there is no other way for customers to get fresh coffee.Demand
If a toy is popular at Christmas resulting in a shortage, some customers may be willing to pay exorbitant prices. In some cases, large retailers aren't aggressive about raising prices in this circumstance as it's viewed as detrimental to their brand.Supply
If a global supply chain shock causes a shortage of a food item or product, retailers may be tempted to dramatically hike prices on their remaining stock.Disasters, Wars and Emergencies
In many cases, it is prohibited by law to hike prices in response to a disaster, act of war or emergency.| Overview: Price Gouging | ||
Type | PricingBusiness LawCompliance | |
Definition | A negative term to describe high prices in response to a shortage, sudden increase in demand or situation such as a disaster. | |
Related Concepts | ||
