Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. Common examples include price increases of basic necessities after natural disasters. Many jurisdictions have enacted legislation against price-gouging. Typically, these laws are defined in terms of these three criteria:
Period of emergency: the laws apply only to price shifts during a declared state of emergency or disaster.
Necessary items: the laws apply exclusively to items essential to survival, such as food, water, and ice.
Price ceilings: the laws limit the maximum price that can be charged for given goods.