A Sticky-Price View of Hoarding

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

51 Pages Posted: 21 Nov 2014 Last revised: 18 Jul 2019

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 2 versions of this paper

Date Written: July 17, 2019

Abstract

Household hoarding of staple foods during periods of scarcity is conventionally portrayed as driven by precaution. By paying high prices for inventories to hedge price uncertainty, households are thought to destabilize commodity markets. However, retail prices are sticky, responding with delay to supply shocks. Hoarding hence conflates precaution with anticipatory stockpiling due to sticky prices. With U.S. scanner data covering a classic 2008 rice hoarding episode, we find that household inventories anticipated delayed retail-price adjustment. There would be significantly less hoarding absent sticky prices. Traditional policy measures invoked during commodity-market bubbles or shortages can be counterproductive under the sticky-price view.

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 (July 17, 2019). 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 )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

HOME PAGE: http://chrishansman.com/

Harrison G. Hong (Contact Author)

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

420 W. 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Aureo De Paula

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

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

Rua Itapeva 474 s.1202
São Paulo, São Paulo 01332-000
Brazil

Vishal Singh

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

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
457
Abstract Views
3,570
rank
62,041
PlumX Metrics