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Estimating the Distaste for Price Gouging with Incentivized Consumer Reports

Author

Listed:
  • Justin Holz
  • Rafael Jiménez-Durán
  • Eduardo Laguna-Müggenburg

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.

Suggested Citation

  • Justin Holz & Rafael Jiménez-Durán & Eduardo Laguna-Müggenburg, 2024. "Estimating the Distaste for Price Gouging with Incentivized Consumer Reports," American Economic Journal: Applied Economics, American Economic Association, vol. 16(1), pages 33-59, January.
    • Handle: RePEc:aea:aejapp:v:16:y:2024:i:1:p:33-59
    DOI: 10.1257/app.20210428
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    Cited by:

    1. Toma, Mattie & Bell, Elizabeth, 2024. "Understanding and increasing policymakers’ sensitivity to program impact," Journal of Public Economics, Elsevier, vol. 234(C).

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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