Anti-Price Gouging Laws, Shortages, and COVID-19: Big Data Insights from Consumer Searches

Abstract

Several states have laws that prohibit large increases in prices on consumer good, or “price gouging,” during emergency situations like pandemics. We investigate the impact of such laws on online consumer behavior using data from Google Shopping Trends during the onset of the COVID-19 pandemic. We focus on hand sanitizer and toilet paper, two staples predominantly bought in-stores in regular times, which experienced substantial in-store shortages since the onset of the pandemic. We find robust evidence indicating anti-price gouging laws are associated with significant increases in online searches for hand sanitizer, and some evidence that these laws increase searches for toilet paper as well. These results imply the possibility that anti-price gouging laws lead to shortages for consumer staples during pandemics. Our results inform the ongoing and rigorous debate surrounding anti-price gouging laws and their potential effects during public health emergencies like COVID-19.

Keywords: COVID-19, Price Gouging, Shortages, Price Controls, Consumer Behavior, Panic Buying