AN ANALYSIS OF THE ENACTMENT OF ANTI-PRICE GOUGING LAWS by Cale Wren Davis A thesis submitted in partial fulfillment of the requirements for the degree of Master of Science in Applied Economics MONTANA STATE UNIVERSITY Bozeman, Montana January 2008 ©COPYRIGHT by Cale Wren Davis 2008 All Rights Reserved ii APPROVAL of a thesis submitted by Cale Wren Davis This thesis has been read by each member of the thesis committee and has been found to be satisfactory regarding content, English usage, format, citation, bibliographic style, and consistency, and is ready for submission to the Division of Graduate Education. Dr. Randal Rucker Approved for the Department of Agricultural Economics and Economics Dr. Wendy A. Stock Approved for the Division of Graduate Education Dr. Carl A. Fox iii STATEMENT OF PERMISSION TO USE In presenting this thesis in partial fulfillment of the requirements for a master’s degree at Montana State University, I agree that the Library shall make it available to borrowers under rules of the Library. If I have indicated my intention to copyright this thesis by including a copyright notice page, copying is allowable only for scholarly purposes, consistent with “fair use” as prescribed in the U.S. Copyright Law. Requests for permission for extended quotation from or reproduction of this thesis in whole or in parts may be granted only by the copyright holder. Cale Wren Davis January 2008 iv ACKOWLEDGEMENTS I thank my advisor Randal Rucker for encouraging me to study anti-price gouging laws. I also thank Prof. Rucker and my committee members, Andy Hanssen and Douglas Young, for their insightful comments and criticisms. Lastly, I thank my family for their love and support throughout graduate school. v TABLE OF CONTENTS 1. INTRODUCTION .........................................................................................................1 2. THEORY OF PRICE CONTROLS...............................................................................4 The Effects of Price Controls.........................................................................................4 Why States Enact APG Laws ......................................................................................12 3. HISTORICAL REVIEW .............................................................................................17 4. ANATOMY AND HISTORY OF APG LAWS..........................................................22 Overview of APG Laws...............................................................................................22 Case Studies.................................................................................................................34 Case Studies of States With APG Laws ................................................................35 New York.........................................................................................................35 Hawaii..............................................................................................................40 Connecticut ......................................................................................................41 Mississippi .......................................................................................................42 Massachusetts ..................................................................................................46 Florida..............................................................................................................47 Louisiana..........................................................................................................55 California .........................................................................................................58 Missouri ...........................................................................................................61 Georgia.............................................................................................................63 Texas................................................................................................................66 Alabama ...........................................................................................................68 Arkansas...........................................................................................................70 Oklahoma.........................................................................................................71 New Jersey.......................................................................................................71 Idaho ................................................................................................................73 Indiana..............................................................................................................73 Kansas..............................................................................................................75 South Carolina .................................................................................................76 Tennessee.........................................................................................................78 West Virginia...................................................................................................79 North Carolina .................................................................................................80 Kentucky..........................................................................................................83 Virginia ............................................................................................................85 Utah..................................................................................................................87 vi TABLE OF CONTENTS – CONTINUED Maine ...............................................................................................................88 Pennsylvania ....................................................................................................88 Vermont ...........................................................................................................89 Wisconsin.........................................................................................................89 Oregon..............................................................................................................91 Case Studies of States Without APG Laws ...........................................................92 Illinois ..............................................................................................................92 Minnesota.........................................................................................................94 Colorado...........................................................................................................94 Maryland..........................................................................................................95 Michigan ..........................................................................................................95 North Dakota....................................................................................................95 New Hampshire ...............................................................................................96 Nevada .............................................................................................................96 Montana ...........................................................................................................96 New Mexico.....................................................................................................97 Ohio..................................................................................................................97 Arizona.............................................................................................................98 5. STATISTICAL MODELS AND RESULTS Predictions....................................................................................................................99 Previous Literature.....................................................................................................101 Background on Hazard and Logit Models.................................................................105 Hazard Models.....................................................................................................105 Logit Models........................................................................................................115 Description of Data....................................................................................................116 Hazard and Logit Model Results ...............................................................................120 6. CONCLUSIONS AND DISCUSSION .....................................................................133 APPENDICES .................................................................................................................136 APPENDIX A: Data Descriptions and Sources ........................................................137 APPENDIX B: Additional Covariates ......................................................................140 REFERENCES CITED....................................................................................................144 vii LIST OF TABLES Table Page 1. Wtp and MC Values...............................................................................................9 2. Wtp, Wtw, and CS values....................................................................................10 3. Wtp, Wtw, and CS information for ten additional