N.H. Has No Price Gouging Law; Some Economists Say That's OK

Mar 11, 2020

There's no hand sanitizer left on this store shelf in Concord, but there's still plenty of soap.
Credit Jason Moon / NHPR

As fears over the coronavirus lead to shortages on the shelves of some products, including hand sanitizer and face masks, regulators from New York to California are using their legal authority to prevent retailers from charging exorbitant prices. 

That includes the threat of financial fines, and in some states, possible criminal charges against retailers who price gouge. 

But while there haven’t been any reported instances of price gouging in New Hampshire, officials here don’t have the same power as those in most other states to stop price spikes. New Hampshire is one of approximately 15 states nationwide — and the only New England state — with no anti-price gouging law on the books. 

While these statutes vary by state, most give regulators the authority to take legal action when retailers raise prices beyond a certain threshold during declared states of emergency. Those emergency measures may be activated following a natural disaster or, for a growing number of states, due to the threat posed by an outbreak of COVID-19.

Many politicians argue these laws are necessary to protect residents from unscrupulous merchants during times of market upheaval. Economists counter that price gouging laws distort the true value of goods and lead to product shortages. 

In recent weeks, online retailers including Amazon and eBay have removed hundreds of thousands of “high priced offers” on goods including hand sanitizer and face masks, following complaints from lawmakers that vendors were improperly capitalizing on fears over the coronavirus.

In California, an outbreak led the governor to enact a state of emergency, which among other provisions means businesses can’t raise prices on most goods by more than 10 percent.

“Communities throughout our state are working to prevent and treat this public health threat,” said California Attorney General Xavier Becerra. “Californians shouldn’t have to worry about being cheated while dealing with the effects of coronavirus.” 

Officials in New York levied the state’s first fine last week, accusing a hardware store in Manhattan of inflating the price of Clorox wipes to $20, as well as raising prices on other disinfectant products.

Pennsylvania, which has also enacted a state of emergency over COVID-19, is asking consumers who encounter inflated prices to contact the attorney general.

In 2006, New Hampshire lawmakers considered price gouging legislation in the wake of Hurricane Katrina, which saw gas prices in some communities in the southern United States surge.

Some of the empty shelves during a visit March 3 to the Market Basket on Lafayette Road in Portsmouth.
Credit Dan Tuohy / NHPR

The measure would have given the New Hampshire Attorney General the ability to investigate alleged gouging on “essential commodities.” While it had bipartisan backing, the bill was ultimately killed by the state Senate on concerns that it amounted to government price setting.

“The bill was sent to interim study because some very far out philosophies were trying to say it was actually price control,” lead sponsor Rep. Lee Quandt, a Republican from Exeter, said at the time. “But the bill had nothing to do with price control. If a complaint was made against an oil or gas company, the only thing they had to do was legitimately justify the prices.”

Many economists question the value of anti-price gouging statutes, arguing that without escalating prices, consumers will hoard goods. Higher prices, however painful in the short term, can also lead suppliers to produce more of a good, which eventually pushes prices back down.

“Although that can feel really unfair, trying to prevent the normal market response by imposing a price ceiling would be worse,” said Drew Cline, president of the Josiah Bartlett Center for Public Policy, a free market think tank. “The normal rise in prices discourages people from buying more than they need, and it encourages suppliers to deliver more product. Those are both necessary market functions, even during emergencies.” 

In Massachusetts and Vermont, anti-price gouging laws appear to only apply to gasoline, prohibiting vendors from charging an “unconscionably high price” during disruptions in the fuel market. 

Other nearby states go farther, including Rhode Island, which declared a state of emergency this week due to the coronavirus. That action means price-gouging protections are now in place for essential commodities, which are defined in statute as “any goods, services, materials, merchandise, supplies, equipment, resources, or other article of commerce.”

While New Hampshire doesn’t have the legal authority to stop local sellers from charging exorbitant prices, Brandon Garod, chief of the state’s Consumer Protection and Antitrust Bureau, said his office is “aware that an issue of great public concern such as COVID-19 may provide opportunities for individuals to engage in unlawful activities.”

Unfair or deceptive business practices are illegal in New Hampshire, he added. 

“Consumers should exercise vigilance."