When markets work, they adapt to even the worst supply shocks.
The cyberattack on the Colonial Pipeline has spurred temporary supply disruptions and induced panic-buying of gasoline, resulting in long lines and empty gas stations in the Southeast over the past few days. Images on social media showed someone who filled up plastic bags of gasoline and loaded them into their SUV — ignited a conversation on the role price gouging in times of supply shocks.
In response, Duke Professor of Political Science Mike Munger made the bold and true affirmation that “price gouging laws cause hoarding.” Yes, you read that correctly. It is a counterintuitive but accurate claim, and disregarding this truth will lead to even greater shortages.