Economics Debunked: Price Gouging

April 9th, 2009 by Eric Cope

This is the first of a series of articles to debunk common misconceptions regarding economics. This article is regarding price gouging. It was triggered by this Ars article. The article complains that a cable company is changing the way it wants to sell its products, cable-based internet in this instance. Previously, people could subscribe to Time Warner’s Cable (TWC) internet with no tangible bandwidth limit. This means they could download as much as they want per month. (Side note: most people download very little, only people downloading large quantities of video (10 per month) would come close to these the the proposed limits). Apparently, TWC has decided to charge $30 for a 5GB plan or $55 for a 40GB plan. Nate Anderson is whining that that is unfair for TWC to do. Many of the comments whine that things should be down to prevent this such as government legislation. All of this implies that TWC’s customers deserve unlimited cable downloads for a price below what TWC is willing to sell it for. Well, I think I deserve you to sell me your car for $1. What’s that? You don’t like that? Well, too bad. I deserve it. You say that’s crazy? Of course it is. Its just as crazy as TWC’s customer whining about this.  If you don’t want to pay that price, don’t buy from them. Buy Verizon’s DSL service, DirecTV’s sattelite internet service, one of many dialup services, or no internet at all. Its your choice. Its the beauty of the free market.

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