29 Hotels Ramp up Rates to Cash in on Rugby Tourists Major hotels in Sydney are charging as much as double the normal rate for rooms on the night of the Sydney Test.

30,000 British and Irish fans are expected to visit Australia for the Lions rugby tour, 10,000 more fans than the number who visited when the Lions last toured.

Source: Sydney Morning Herald, 9 June 2013 a What is price gouging?

b Is the doubling of the price of a hotel room during the Lions tour an example of price gouging?

c Does the rise in the price of a hotel room mean that the market for hotel rooms is inefficient?

d If hotel rooms are not allocated by the market price, what other mechanisms could have been used? Would any of these other mechanisms be fair?