RALEIGH – I usually wince when someone begins to bloviate about “price gouging,” but in the case of a dispute between the alumni of Elizabeth City State University and local hoteliers, I admit to being pleasantly surprised.

The traditionally black institution in Northeastern North Carolina has its annual Homecoming Weekend in October. Alumni and parents have complained about what they perceive to be the exorbitant prices charged by local hotels for the weekend. On Saturday, the board of ECSU’s National Alumni Association announced that in response, its members have decided to shun the Elizabeth City hotels and secure lodging across the border in Virginia for alumni attending the homecoming festivities. And, just to make sure their message is sufficiently amplified, the association says the boycott will extend to other Elizabeth City businesses, as well.

Price gouging is a notoriously slippery and mischievous term. Its usual meaning makes no economic sense, as it assumes that the value of a good is fixed and objective, related to the cost of producing it, rather than variable and subjective, related to changing circumstances of need and scarcity. Thus when government officials start jawboning about price gouging, it is often followed by regulations or laws that try to make it criminal to adjust market prices to reflect the rising value of goods and services.

To many, the notion that prices reflect the cost of production sounds plausible. So they get angry about generators costing more after hurricanes or folks selling memorabilia of just-deceased celebrities on eBay with a big markup. Aren’t these things worth just as much before and after such events? Isn’t this unfair?

Not at all. If you offer me a glass of water right now, it won’t be worth much to me. I’m not thirsty, and if I get thirsty I’ll get up and use my own tap. On the other hand, if I just staggered into your oasis from the desert, I might be willing to pay you quite a bit for that glass of water. It’s the same water, but it does not have the same value to me.

Think prices should simply reflect the cost of production? No, you don’t. Not really. Just think about it: if two gardeners each worked hard for four hours, one planting a nice assortment of flowers in your garden and the other digging and filling a hole, would you really value their work equally?

In the case of the Elizabeth City State alumni, however, their complaint about price gouging isn’t that local hotels shouldn’t legally be able to charge high prices during Homecoming Weekend. The alumni just don’t want to pay the offered prices, and are willing and able to seek alternatives. One official told the Daily Advance that Virginia hotel owners had offered the alumni reduced rates, freebies, upgrades and rebates for their patronage. “They are rolling out the red carpet for us,” he said. “Better accommodations at better rates.”

That’s just free enterprise in action. The alumni are using their bulk-buying heft to shop for a better deal. Competing firms in Elizabeth City will now have to consider a counter-offer if they wish to retain the business. Whatever happens, here’s hoping that ECSU students are paying close attention to this educational episode.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.