May 3, 2017
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 (i.e., be subject to scrutiny) or "outside" the law (i.e., 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 anti-price 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 anti-price gouging laws - that markets fail in times of emergency - is often erroneous.
Keywords: Emergency, Body Parts, Transplants, Organs, Price Gouging, Unconscionable contracts, Economic Analysis
In Sovereignty, Emergency, Legality, Cambridge University Press, 2009).