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Rational Panic Purchases During Crises

SSRN Electronic Journal
2021
  • 0
    Citations
  • 559
    Usage
  • 1
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Usage
    559
    • Abstract Views
      449
    • Downloads
      110
  • Captures
    1
  • Ratings
    • Download Rank
      502,327

Article Description

This paper analyzes panic purchases of goods during crises such as a pandemic. Our two-period model incorporates uncertainty about sellers' capacity and about buyers' need for the good. Even if sellers have enough capacity to satisfy demand, there may be shortages because consumers panic purchase (i.e. they buy the good before knowing whether they will need it). Shortages can hence be a self-fulfilling prophecy: consumers inefficiently panic purchase in expectation of shortages. The paper analyzes various measures taken against panic purchasing, such as rationing, price caps, information policy, and restrictions on resellers.

Bibliographic Details

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