A Sticky-Price View of Hoarding

Kilts Center for Marketing at Chicago Booth – Nielsen Dataset Paper Series 1-050

47 Pages Posted: 21 Nov 2014 Last revised: 20 Apr 2020

See all articles by Christopher Hansman

Christopher Hansman

Imperial College Business School

Harrison G. Hong

Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Aureo de Paula

University College London - Department of Economics; Getulio Vargas Foundation (FGV) - Sao Paulo School of Economics

Vishal Singh

New York University (NYU) - Department of Marketing

Multiple version iconThere are 4 versions of this paper

Date Written: April 16, 2020

Abstract

Hoarding of staples has long worried policymakers due to concerns about shortages. We quantify how sticky store prices --- delayed price adjustment to shocks by reputable retailers --- exacerbate hoarding. When prices are sticky, households hoard not only for precautionary motives but also non-precautionary motives: they stockpile as they would during a standard retail promotion or for the purpose of retail arbitrage. Using US supermarket scanner data covering the 2008 Global Rice Crisis, an episode driven by an observable cost shock due an Indian ban on raw rice exports, we find that sticky prices account for a sizeable fraction of hoarding. Hoarding is mostly for own use and more prevalent among richer households. Our findings are consistent with media reports of distributional concerns associated with hoarding during the Covid-19 Pandemic.

Keywords: Hoarding, Commodity Bubbles, Rice, Commodity Pricing

JEL Classification: Q11, G00

Suggested Citation

Hansman, Christopher and Hong, Harrison G. and de Paula, Aureo and Singh, Vishal, A Sticky-Price View of Hoarding (April 16, 2020). Kilts Center for Marketing at Chicago Booth – Nielsen Dataset Paper Series 1-050, Available at SSRN: https://ssrn.com/abstract=2528080 or http://dx.doi.org/10.2139/ssrn.2528080

Christopher Hansman

Imperial College Business School ( email )

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HOME PAGE: http://chrishansman.com/

Harrison G. Hong (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Aureo De Paula

University College London - Department of Economics ( email )

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Getulio Vargas Foundation (FGV) - Sao Paulo School of Economics

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Vishal Singh

New York University (NYU) - Department of Marketing ( email )

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United States

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