What is commonly referred to as "price gouging" is nothing but an increase in price reflecting a reality of high-demand and low-supply (or expected high-demand and low supply). The result of the higher price is a greater allocation of a limited resource to more people.
I explained in more detail the signals that high prices send to consumers and producers at 8:00. Before you think I'm a terrible person for saying "price gouging" is good, please listen to my argument below (starts at 19:45):
http://media.worldnow.com/kfmbam/podcast/the_mike_slater_show_5311.mp3
Here is a well written essay, and this one, and this one, and of course this one.
Here is Adam Smith in 1776, Book IV, Chapter 5 of The Wealth of Nations:
"When the government, in order to remedy the inconveniences of a dearth, orders all the dealers to sell their corn at what it supposes a reasonable price, it either hinders them from bringing it to market, which may sometimes produce a famine even in the beginning of the season; or if they bring it thither, it enables the people, and thereby encourages them to consume it so fast as must necessarily produce a famine before the end of the season. The unlimited, unrestrained freedom of the corn trade, as it is the only effectual preventative of the miseries of a famine, so it is the best palliative of the inconveniences of a dearth; for the inconveniences of a real scarcity cannot be remedied, they can only be palliated. No trade deserves more the full protection of the law, and no trade requires it so much, because no trade is so much exposed to popular odium."
I keep putting "price gouging" in quotes because it doesn't really exist. If someone is willing to pay a given price, then there's no gouging going on.
Here is a Stossel report on this:
http://www.youtube.com/watch?v=R6ojYtKazgQ
