A Sticky-Price View of Hoarding

48 Pages Posted: 28 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 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.

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Suggested Citation

Hansman, Christopher and Hong, Harrison G. and de Paula, Aureo and Singh, Vishal, A Sticky-Price View of Hoarding (April 2020). NBER Working Paper No. w27051, Available at SSRN: https://ssrn.com/abstract=3586183

Christopher Hansman (Contact Author)

Imperial College Business School ( email )

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Harrison G. Hong

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

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Aureo De Paula

University College London - Department of Economics ( email )

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Vishal Singh

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

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