Estimating the Distaste for Price Gouging with Incentivized Consumer Reports
American Economic Journal: Applied Economics
vol. 16,
no. 1, January 2024
(pp. 33-59)
Abstract
Thirty-four states prohibit price increases during emergencies, and individuals take costly actions to report violators. We measure experimentally the willingness to pay to report sellers who increase prices of personal protective equipment. Over 75 percent of subjects pay to report, even if others are willing to buy at those prices. We argue that reports contain information about a desire to prevent or punish third-party transactions at unfair or illicit prices. Reports are partially driven by a distaste for firm profits or markups, implying that the distribution of surplus between producers and consumers matters for welfare.Citation
Holz, Justin, Rafael Jiménez-Durán, and Eduardo Laguna-Müggenburg. 2024. "Estimating the Distaste for Price Gouging with Incentivized Consumer Reports." American Economic Journal: Applied Economics, 16 (1): 33-59. DOI: 10.1257/app.20210428Additional Materials
JEL Classification
- C93 Field Experiments
- D22 Firm Behavior: Empirical Analysis
- D63 Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- H12 Crisis Management
- K22 Business and Securities Law
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