There are more than 600 listings on the North New Jersey Craigslist for portable generators, with prices starting at about $700, but with most going for $1,000 and up. Here’s an example of a new Black Max 5,000 watt generator that was purchased at Home Depot (according to the ad) and is now selling for $1,100 on Craigslist. That generator normally sells for about $700 at Home Depot and elsewhere.
the “price gougers” entrepreneurs and speculators are buying up all of the portable generators at Home Depot, Sears and Lowe’s at regular retail artificially low prices and re-selling them at prices that many consider to be “price gouging” what the market will bear, or market prices.
And here’s a listing on Craigslist in the generator category warning people of the “Generator Scam” – “The listings for generators are from people looking to take your money! The generators were purchased at Lowe’s, Home Depot, Sears, etc. They only cost $799!! These people stood in lines to buy generators only to take your money and make a profit. In return many people are without a generator – many little children don’t have electricity in their homes because their parents can’t afford to pay twice the price of a generator from price gouging!”
Well, maybe if Home Depot, Sears and Lowe’s had been allowed to raise their prices to $1,000 (or more) this week to reflect the true value of gas generators following the hurricane, more people with children would actually have a generator right now because the retailers wouldn’t have sold out so fast! And you really can’t blame the retailers for not raising prices, because they could have been charged with price gouging by the state of New Jersey. So now gas generators are sold in the secondary market for market-based prices on Craigslist, where it is probably difficult for state officials to charge individuals with “price gouging.”
Bottom Line: The active market for gas generators on Craigslist demonstrates that government enforcement of “price gouging” laws doesn’t eliminate voluntary market transactions for critical items like generators at market-based prices, it just drives the market for generators into the informal marketplace on Craigslist, where market prices prevail.