3. What is Price Gouging?
Under the law, evidence of price gouging was explained as follows: the law compares the
price of the commodity or service to the average price charged over the 30 day period prior
to the declared state of emergency. If there is a “gross disparity” between the prior price
and the current charge then it is price gouging.
Some might believe that price gouging is when suppliers are benefiting from a short-term
change in the demand curve or when prices rise higher than what a consumer wants to pay
or considers fair or reasonable.
Basically, it is an increase in prices that are not justified after a supply or demand shock
during an emergency.
4. Price Gouging: State of Emergency
Florida Statute 501.160 states – it is unlawful
during a state of emergency to sell, lease,
offer to sell, or offer for lease commodities,
dwelling units, or self-storage facilities for
an amount that grossly exceed the average
price of the commodity the thirty days
before the declaration of the state of
emergency unless the seller can show
increases in its prices or market trends
justifying the price. Examples of necessary
commodities are food, ice, gas, oil and
lumber. This is a civil crime enforced by the
Attorney General, the Department of
Agriculture and Consumer Services and
State Attorney.
6. Can Everyone Benefit?
Most suppliers benefit from price gouging but is
there a positive aspect to price increases during a
hurricane for consumers?
Numerous economists have explained that price gouging is beneficiary to many people, not just the suppliers.
When individuals are concerned about the availability of resources, they stock up and buy as much as they
can. This eventually leads to a shortage of supplies.
Without price gouging laws, suppliers have the incentive to bring goods and services to the affected area so
not only is there more goods, but the increase stops consumers from buying more than they need.
Regardless of price gouging, competition would decrease prices to the most affordable but demanded price.
7. Super Bowl & Hotel Rates
A Saturday night stay at a particular
South beach hotel ran for $99 in the
middle of January. Two weeks later,
during Super Bowl weekend, the same
exact room rented for $800.
Some cities asking companies to refrain from gouging Super Bowl week.
If prices can be held down down, owners believe more tourism will result which will ensure more profit
One might differentiate the difference between price gouging and a supply and demand principle
by determining if one is in a state of emergency and if it is a necessity rather than a luxury.
8. eBay: Secondary iPad Market
Several units ended up on
eBay auctions selling from
$2,000 - $4,000.
Other units were sold
Families were in line for overseas for $1,700 - $2,000
hours to buy up all of the where the iPad was not
units and re-sell them for released yet.
astronomical prices.
9. Is Price Gouging for Apple iPads Unethical?
Price Gouging for Non-Necessities (Luxuries)
Price gauging for the iPad is based on the supply and demand economic concept.
Electronics are considered luxuries and third type necessities.
Apple followers are willing to pay thousands for the latest gadget.
10. Is Price Gouging for Apple iPads unethical? (cont.)
Price Gouging for Necessities
Price gauging for necessities in a state of emergency is considered unethical.
It’s unethical when suppliers exploit an imbalance in supply in their favor by selling necessities for
new higher prices.
Individuals of all social classes are forced to buy necessities for double or triple the price.
12. Cookies
Do you like cookies? We have all types of cookies and almost everyone
loves them. Check this one for example:
The cookie in the picture won’t harm you, but the other kind you can’t find in
your oven are the ones that you should really be careful about.
They are called: INTERNET COOKIES
13. What are Internet cookies and how are these
cookies used in your computer?
Cookies are small files downloaded on to your computer whenever you visit a website.
They are used by advertisers to track the users personal info and provide them with types of things the user
likes whenever he or she visits a website.
Next, flashing banners or ads are added to the users website to attract their attention.
14. Why are the
Do we have
marketing firms
any privacy?
using cookies?
Some websites care about people’s
privacy and they will not allow
access to people’s personal data.
However, as soon as someone In order for marketing firms to sell
attempts to keep records or use their products, they have to use
tracking devices on other people, cookies to receive information on the
privacy rights become an issue. websites visited by a user. After
getting this information, they send
flashing banners and ads to the
user’s most visited websites in order
On the other hand, some websites
to attract attention to their products.
that use cookies can lead advertisers
directly to someone’s personal info.
15. How is this helping
the marketing firms Morally right
or advertisers to
or wrong?
gain profits?
By Knowing someones personal Advertising a product is good, but
data, it is easy for an advertiser to tracking someones personal data is
send his ads to the website that the morally wrong. Advertisers are
person visited most. Once they catch making profits out it by sending their
that customers attention, and the flashing banners to the customers
customer click their banners, they and some of these banners might be
start interacting with the customer by false and contain viruses that help
introducing them to their products hackers get personal info.
and making offers to buy their
products.
17. All about Pop Ups
First introduced in the mid 90’s.
Marketers from all over the world started using this method.
They soon became overwhelming and annoying to the
consumers.
Due to the annoyance, pop-blockers were introduced by internet
giants (Yahoo, Google, and Microsoft).
18. What happened to pop-up ads?
Was this a proper way to advertise?
Pop up ads are still around. Pop-up ads began to have a more
However, they are not as annoying as negative impact than it did a positive
before. one.
Some organizations have stopped Many organizations realized this
using them and a lot of software is way of advertising was giving their
currently out that stops these ads. brand/company a negative image.
Marketers and World Wide Web
guru’s have found other ways to
advertise through the internet.
19. What is Spam?
What types of Spam is there?
Spam is the use of electronic While the most widely recognized form of
spam is e-mail spam, the term is applied to
messaging systems (including most
similar abuses in other media:
broadcast media, digital delivery
systems) to send unsolicited bulk Instant messaging spam
Usenet newsgroup spam
messages.
Web search engine spam,
Spam in blogs,
Wiki spam
Online classified ads spam
Mobile phone messaging spam
Internet forum spam
Junk fax transmissions
Social networking spam
Television advertising
File sharing network spam.
20. Spam Marketing. Why?
Spamming remains economically viable because advertisers have no operating costs beyond the management
of their mailing lists, and it is difficult to hold senders accountable for their mass mailings.
Spammers are numerous, and the volume of unsolicited mail has become very high. In the year 2011, the
estimated figure for spam messages is around seven trillion.
Lets say I want to send an advertisement to 1,000,000 “targeted” people:
-To send by regular bulk mail, it could cost around $200,000 - $300,000
-To send by email, it might only cost $1,000
-i.e: the cost to buy a list of email addresses harvested from web sites, mailing lists,
chatrooms, and news groups are a lot cheaper.
Then there are Dictionary Attacks:
-Try a lot of plausible address combinations
-Keeping the ones that don’t bounce back
-Puts added strain (bandwidth) on the network
21. Categorical Imperative
Categorical Moral Imperative Ethical View
-Act guided by moral principles that can at the same time be used as base for a universal
code of law
-Act so that you always treat both yourself and other people as ends in themselves; never
purely as means to an end.
Scenario:
Suppose I have a great new product that I wish to advertise. I send an unsolicited email to a
large group of people knowing that only a tiny fraction is interested. It is not ethical as if
everyone sent spam, it would render email useless. Everyone pays for email access and should
not have their services rendered useless.
22. Rule Utilitarianism Act Utilitarianism
Rule U'litarian Evalua'on: Act U'litarian Evalua'on:
‐We should adopt moral rules which, if followed by everyone, will
lead to the greatest increase in overall happiness. ‐An ac'on is right (or wrong) to the extent that it
increases (or decreases) the total happiness of the
Scenario: Products being adver3sed, where only a small frac3on of affected par'es.
targets are known to be interested.
Scenario:
A product that costs $10 to make, is sold for$25,
purchasers value at $30.
What if only 1% of all small businesses in the US emailed you 1 ‐ (i.e: their derived happiness)
Spam adver'sement per year?
There are 24,000,000 small businesses in America 100 million bulk messages sent cos'ng
those who receive it and are not
interested.
1% => 240,000 emails per year
As a result each of those has $0.01 of
unhappiness ('me wasted).
240,000 / 365 = 657 emails per day for each person
10,000 customers purchase product and get
full happiness.
‐Profit for business = $150,000
So is using Cookies, Pop‐Ups or Spam ethical under Rule U'litarianism? ‐Customer benefit = $300,000 ‐ $250,000
‐No, because the usefulness of these would be very minimal! ‐Unhappiness = 99,990,000 * $0.01 = $999,900
24. Basically.....
Price gouging occurs when the wake of an emergency causes sellers of a certain necessary good to sharply
raise prices beyond a normal specified selling cost.
In the United States, there is no anti-gouging legislation (besides during a state of emergency). Although one
bill has passed the House of Senate focusing on price gouging gasoline.
Some people believe that price gouging is unethical while some economists believe that it can greatly benefit
someone in desperate need.
To an extent, price gouging can serve moral goals by promoting effective allocation of insufficient resources
and reducing shortages during times of emergency, overall creating economic incentives that will lead to
increases of supplies to desperate populations.
When thinking about price gouging, make sure you decipher the difference between a luxury and a necessity.
-We all need water during a hurricane, but are getting super bowl tickets a life or death situation?
25. And.....
When it comes to Internet advertising, it is unethical to make false claims and bait-
and-switch offers.
Cookies, Pop-Ups and Spam all occur without the permission of the receiver and it
is not considered an appropriate or moral way to advertise.
The Internet Advertising Bureau is trying to develop guidelines for a ethical
framework of advertising on the Internet.
Using Cookies, Pop-Ups and Spam are unethical ways to advertise under the rule
utilitarianism because the usefulness of this Internet marketing is very minimal.
When advertising, it’s important to keep the categorical imperative in mind and
keep moral principles in mind at all times.
26. QUIZ TIME !
1. To determine price gouging, the law compares 3. Are Cookies, Pop-ups or Spam ethical under Rule
the price of the commodity or service to the Utilitarianism? Why?
average price charged over how many days
A) Yes, they can be used by anyone, therefore, it is
prior to a state of emergency? ethically allowed
B) No, they would diminish the usefulness that the
A) 7 media used to solicit it
B) 15 C) Yes, it allows anyone to make profits upon use
C) 30 D) No, they would allow equal happiness by all
D) 45 recipients
2. Many economists believe that price gouging can 4. Which forms or means of Internet advertising do
benefit: many receivers find inappropriate or even
deceitful?
A) Suppliers
B) Consumers A) All forms of Internet marketing
C) People in affected areas B) Pop-ups, Spam, and Cookies
D) All of the above C) Email lists you’ve signed up for
D) None