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. 2021 Jul;59(3):867-879.
doi: 10.1111/ecin.12993. Epub 2021 Apr 5.

Seller reputation and price gouging: Evidence from the COVID-19 pandemic

Luís Cabral  1   2 , Lei Xu  3
Affiliations

Seller reputation and price gouging: Evidence from the COVID-19 pandemic

Luís Cabral et al. Econ Inq. 2021 Jul.

Abstract

From mid-January to March 2020, 3M masks sold on Amazon by third party sellers were priced 2.4 times higher than Amazon's 2019 price. However, this price increase was not uniform across sellers. We estimate that when Amazon is stocked out (one of our measures of scarcity) new (entrant) sellers increase price by 178%, whereas the continuing sellers' increase is limited to 56.7%. This is consistent with the idea that seller reputation limits the extent of profitable price gouging. Similar results are obtained for Purell hand sanitizer and for other measures of scarcity. We also explore policy implications of our results.

Keywords: Amazon; COVID‐19; price gouging.

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Figures

FIGURE 1
FIGURE 1
Scarcity measures over the first months of 2020 (S1: % items Amazon is out of stock, S2: % continuing sellers, S3: Google searches)
FIGURE 2
FIGURE 2
Price ratio by type of seller (Amazon data as scatter plot to reveal stockouts)
FIGURE 3
FIGURE 3
Price ratio by type of seller (Amazon data as scatter plot to reveal stockouts)
See this image and copyright information in PMC

References

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