In the wake of a calamity like Superstorm Sandy, is it fair for businesses — from corner bodegas to gas stations to car services — to jack up their prices, earning windfall profits off the desperation of their customers? There aren’t a lot of people who would answer yes to that question; in the midst of the devastation of Sandy, this sort of price gouging seems not only deeply unethical but almost, you might say, treasonous. One disgruntled consumer told CNBC.com’s John Carney he considered it a kind of “reverse looting.”

So it was hardly surprising to hear New Jersey Governor Chris Christie issue a blunt warning to merchants that price gouging is illegal and brings harsh penalties. “During emergencies, New Jerseyans should look out for each other,” Christie said in a statement, “not seek to take advantage of each other.” New York Attorney General Eric T. Schneiderman issued a similarly stern warning.
But there’s one group of people who don’t share the general distaste for disaster profiteering: economists. Why is that? Because what most people call price gouging is, to them, simply an example of the laws of supply and demand working as they should.