A Sticky-Price View of Hoarding

50 Pages Posted: 8 May 2020

See all articles by Aureo de Paula

Aureo de Paula

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

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)

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.

Suggested Citation

de Paula, Aureo and Hansman, Christopher and Hong, Harrison G. and Singh, Vishal, A Sticky-Price View of Hoarding (April 2020). CEPR Discussion Paper No. DP14633, Available at SSRN: https://ssrn.com/abstract=3594264

Aureo De Paula (Contact Author)

University College London - Department of Economics ( email )

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

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Christopher Hansman

Imperial College Business School ( email )

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HOME PAGE: http://chrishansman.com/

Harrison G. Hong

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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Vishal Singh

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

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New York, NY
United States

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