Kobi Finestone

Microfoundations have long been the subject of a methodological debate over how microeconomic and macroeconomic analysis are understood to relate to one another. Despite once being an important debate with profound consequences for how economics was practiced, changes in macroeconomics over the past 40 years have made the debate vestigial and irrelevant for understanding, justifying, and criticizing modern mainstream macroeconomics. Specifically, macroeconomics has undergone a methodological convergence, making it methodologically indistinguishable from microeconomic analysis. For this reason, the debate should be reoriented away from “microfoundations” and toward issues which are currently salient: aggregation and heterogeneity.

SARS-CoV-2 has unleashed an unprecedented global crisis that has caused the demand for essential goods, such as medical and sanitation products, to soar while simultaneously disrupting the very supply chains that allow individuals and institutions to obtain those essential goods. This has resulted in stark price increases and accusations of price gouging. We survey the existing philosophical literature that examines price gouging and identify the key arguments for regulators permitting such behavior and for regulators restricting such behavior. We demonstrate how the existing accounts are designed for localized emergencies rather than global persistent crises such as the coronavirus pandemic. In light of this, we highlight an understudied justification for price gouging that is much more salient during global crises: incentivizing increased production of essential goods. Furthermore, we pinpoint three conditions that help determine whether authorities should restrict price gouging during the coronavirus pandemic and similar global crises.