CEPR & IHEID | COVID Economics series
CEPR Webinar COVID series

Seller Reputation and Price Gouging: Evidence from the COVID-19 Pandemic

Luis Cabral, New York University
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Webinar streamed via zoom

A Joint CEPR and the Graduate Institute webinar series based on papers in CEPR Covid Economics: Vetted and Real-Time Papers

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As part of the Joint webinar series organised by the Department of International Economics and the CEPR,  we are pleased to invite you to an online public talk by Professor Luis Cabral. He will present his paper

Price Gouging

coauthored with Lei Xu and published in the Covid  Economics,  Vetted  and  Real-Time Papers series (CEPR Press, Issue 12, May 2020).

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Abstract: We  test  the  theory  that  seller  reputation  moderates  the  effect  of  demand  shocks  on  a  seller's  propensity  to  price  gouge.  From  mid  January  to  mid  March  2020,  3M  masks  were  priced  2.72  times  higher  than  Amazon  sold  them  in  2019.  However,  the  difference  (in  price  ratios)  between  a  post-COVID-19  entrant  and  an  established  seller is estimated to be about 1.6 at times of maximum scarcity, that is,  post-COVID-19  entrants  price  at  approximately  twice  the  level  of  established  sellers.  Similar  results  are  obtained  for  Purell  hand  sanitizer. We also consider cumulative reviews as a measure of what a  seller  has  to  lose  from  damaging  its  reputation  and,  again,  obtain  similar results. Finally, we explore policy implications of our results


Covid  Economics,  Vetted  and  Real-Time  Papers,  from  CEPR,  brings  together  formal   investigations   on   the   economic   issues   emanating   from   the   Covid   outbreak,  based  on  explicit  theory  and/or  empirical  evidence,  to  improve  the  knowledge base.

Founder: Beatrice Weder di Mauro, President of CEPR ; Editor: Charles Wyplosz, Graduate Institute Geneva and CEPR.