Document Type

Working Paper

Publication Date

3-6-2009

SSRN Discipline

Economics Research Network; Legal Scholarship Network; Public Choice & Political Economy eJournals; Law School Research Papers - Legal Studies; Law & Society eJournals; Law & Society: Private Law eJournals; LSN Subject Matter eJournals; Law School Research Papers - Public Law & Legal Theory; ERN Subject Matter eJournals; European Private & Public Law eJournals

Abstract

The study of emergency has received much attention from political theorists Relying on the realms of philosophy theology and morality these scholars have focused on whether acts of the sovereign in times of emergency should lie inside the law ie be subject to scrutiny or outside the law ie enjoy some form of immunity This article on the other hand utilizes economic theory to analyze emergencies It argues that some emergencies are subject to the same laws of demand and supply and often do not mandate any intervention while others may deserve a unique treatment often within the law that can be premised on simple rational behavior models Specifically this paper discusses two types of emergencies private and public The discussion of private emergencies focuses on decisions in which courts were asked to compel one to undergo a medical procedure to give an organ that would save the life of another The article employs economic theory to reconcile the seemingly contradictory decisions The article also investigates strategic behaviors remedial reactions and under what conditions if any courts or regulators should intervene in organ transactions The discussion of public emergencies focuses on price gouging It reviews a number of antiprice gouging laws the conditions that trigger them as well as the justifications for and against these laws Using a number of examples the article demonstrates how the so called exorbitant prices help decrease shortages enable inflow and storage of essential commodities allocate scarce resources reduce strategic behavior and queues and stabilize demand It argues that the assumption underlying antiprice gouging laws that markets fail in times of emergency is often erroneous

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