I’m back for another episode of the Professor Is In, answering your questions, responding to comments, and clarifying my previous takes.
The gas price story is not just about your local station—it runs through refining, production constraints, inventories, retail competition, and consumer behavior. When oil prices rise, gas prices can adjust within days, but when they fall, the trip back down is slower—and there are several possible reasons, from tacit collusion to slower consumer search to real production asymmetries.
This conversation also widens into one of the biggest ideas in macroeconomics: sticky prices. Across much of the economy, businesses don’t constantly update prices when demand or costs change. That matters because price stickiness can keep markets from quickly returning to equilibrium, leading to ups and downs in the business cycle.
I also tackle the slippery question of price gouging. Is there a technical definition? Not really, even though ordinary people often feel they know it when they see it. That tension has real stakes for policy debates, including anti-price gouging laws and investigations into unfair pricing.
