Schneiderman vs. market-clearing prices

by Walter Olson on November 10, 2012

Some politicians just want there to be random shortages [WSJ editorial]:

New York Attorney General Eric Schneiderman has subpoenaed the Craigslist website for the identities of people who advertised gas for sale at high prices. Mr. Schneiderman is doing this in the name of a New York law that forbids charging an “unconscionably excessive price” during an “abnormal disruption in the market.”

{ 4 comments }

1 OBQuiet 11.11.12 at 7:17 pm

Maybe my understanding if the word is incorrect, but I wonder how any completed sale could occur at an “unconscionably excessive price” unless some sort of threat was being made.

Clearly both parties found the price acceptable. Would that not, by definition, mean it was not unconscionable?

2 boblipton 11.11.12 at 8:28 pm

Is Mr. Schneiderman going to sue jointly and separately the members of the Organization of Petroleum Exporting Countries?

Bob

3 marco73 11.12.12 at 8:33 am

I’d question the “abnormal disruption in the market.”
Wasn’t everything so hunky-dory in New York City, that they were going to hold a marathon?
And didn’t they have a professional football game right there in New Jersey?

They’d have all the gas they needed tomorrow if they:
Allowed the price of gas to reflect the cost of trucking gas in from possibly hundreds of miles away by tanker truck.
Allowed the price of gas to reflect the cost of running and manning generators for the power necesssary to run all the pumps.
Waived environmental rules on the “blend” of gasoline that could be sold.

So instead of helping the citizens get back on their feet, let’s call in the lawyers. Sounds like typical NYC to me.

4 OBQuiet 11.12.12 at 9:51 am

IN regard to marco73’s comment:

There does seem to be some circular logic at work here. As you point out the Market would solve the problem quickly if allowed to do its job. But the law, as interpreted, expressly prohibits that. So you end up with the situation where when the Market works, the results are interpreted as evidence that the Market was disrupted, triggering penalties that prevent the Market from working.

Sounds like something worthy of Captain John Yossarian.

Comments on this entry are closed.