Right now there is a shortage of hand sanitizer, medical and industrial masks, and even toilet paper due to hoarding that was inspired by the novel corona virus. Many stores have limited the number of units that can be purchased by one individual, but that doesn’t stop people from buying more than they need. It only adds some level of inconvenience to the process of buying more than needed.
If the price of hand sanitizer or masks reflected current demand it would accomplish the following:
People would be forced to decide how much they want to hoard and would therefore be less inclined to hoard. Thus supply would be freed from stockpiles and made available to those people who don’t have any.
Retailers would be less risk averse when restocking. As it stands right now if a retailer orders 20 times their normal order and demand falls it is the retailer who will be stuck with the excess inventory. The retailer gets all the negative risk and without price gouging gets none of the excess profit.
Retailers could afford to pay more for their next order, which could enable factories to pay bonuses and overtime to existing workers to work longer hours or even allow factories to bring on temporary additional shifts to meet demand. This would lessen the risk to manufacturers of making too many units for when demand dies down.
People who are hoarding stockpiles would be incentivized to consider selling some of their excess units in order to capitalize on the profit. This would increase supply.
Also consider that if the retailers do not do the price gouging the secondary market will. This is already happening. Why should the only people to benefit with additional profits from shortages be third parties? If I was a retailer of these goods I would jack the price up in my stores, put them behind the counter, and have signage explaining all of the benefits of price gouging. And if the media complained I would consider it a free ad for the fact that, unlike all the other stores, we still have stock available.