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Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you make the most of staying home.
Visit the hub

Matt Colvin, a Tennessee man who stockpiled hand sanitizer and wipes, says he has donated what he bought, outside of Chattanooga, Tenn., on March 12, 2020.

DOUG STRICKLAND/The New York Times News Service

Jeremy Snyder is a professor in applied ethics, at the Faculty of Health Sciences, Simon Fraser University

The spread of the COVID-19 in Canada is rapidly leading to changes in day-to-day life as governments cancel large gatherings, close schools, recommend social distancing and, in some cases, require individuals to self-quarantine until the threat of infection has passed. These moves, along with advice to store supplies in case of Wuhan or Italy-style restrictions on movement, have led to panic purchasing of everything from hand sanitizer to surgical masks to toilet paper. Not surprisingly, this mass buying spree has created shortages of supplies and increased prices. Accusations that some businesses are taking advantage of the crisis to price gouge consumers are becoming common.

Are these charges reasonable? To know that, we need to know what price gouging is and why it is wrong. In practice, many people will shout price gouging any time prices increase quickly, especially after a disaster or supply disruption. Last week, customers at a Shopper’s Drug Mart in Toronto objected to the cost of hand sanitizer doubling, and many have cited examples of cleaning products running hundreds of dollars on Amazon when they used to cost a small fraction of that. Customers typically complain that these prices are immoral – but are they?

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Well, it depends. In the case of Shoppers Drug Mart, a spokesperson explained that their normal source of hand sanitizer was out of supply given the increased demand, so they had to go with a different, more expensive wholesaler. The price charged at their stores had gone up accordingly, but it was in line with their normal profit margin. If the cost is more but the profit the same, it is hard to see this as an objectionable instance of taking advantage of others’ suffering. Unless we also find it objectionable that businesses sell Band-Aids to kids with scuffed knees under normal conditions. These businesses, in reality, profit from suffering in everyday cases.

So, what about vendors on online marketplaces such as Amazon that are massively increasing their prices for surgical masks and disinfectant solely in response to heightened demand for these products rather than a change in costs? These actions are much more clearly immoral and should be labelled as price gouging. They don’t represent a response to the market meant to keep businesses afloat but rather are purely driven by the opportunity to take advantage of others’ newfound vulnerability and critical need.

Adjusting prices to align with costs can acknowledge others’ needs while meeting one’s own. Charging whatever panicked and desperate buyers are willing to pay treats people simply as means of self-enrichment. When sellers see people as profit, they treat their customers simply as a resource to be exploited instead of fellow humans with needs.

Just as there will be those who wrongly claim that every price increase in the coming weeks is price gouging, some will say that these extreme price increases are the necessary work of the market. They incentivize sellers to produce more hand sanitizer and customers to limit what they buy and use. Perverse as it may seem, they say, so-called price gouging is the fastest way to meet the public’s needs and get prices back to normal.

While this is true to a point, the virtues of price gouging can be achieved even without uncuffing the invisible hand of the market and dehumanizing others. Government and individual sellers can limit purchases of products that are essential to health. This rationing effect is achieved without increasing prices and without making them unattainable to those who aren’t able to afford higher costs. Higher prices will signal producers to enter the market, but so too will increased demand at pre-existing prices and, if necessary, government incentives can further spur production.

Without a doubt, we will hear more complaints about price gouging as the novel coronavirus crisis deepens in Canada and across the world. There will be plenty of justified and unjustified calls to end price gouging as well. We should focus on the real instances of gouging lest we scare away those simply trying to stay solvent in a rapidly changing marketplace.

At the same time, we can take smart, well-informed actions to make sure that everyone, from the general public to front line health workers, get the essential supplies they need to combat this crisis.

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