Food retailer response to price gouging litigation

Abstract

Price gouging laws are designed to protect consumers from skyrocketing prices, but are they beneficial in practice? In this research, we analyze food retailers' response to widespread price gouging litigation for table eggs at the onset of the COVID‐19 pandemic. Our results suggest that price gouging litigation led to a dramatic change in US food retailer behavior, which persisted long after the resolution of many of these legal disputes. Major grocery retail chains responded to price gouging litigation by announcing price freezes on thousands of staple products. By rigidly adhering to pre‐pandemic price levels for eggs, we find that retailer response led to a breakdown in the historic dynamic equilibrium relationship between egg prices and the costs of major inputs. At a time when the cost of egg production increased sharply, we find that retailers chose to reduce their purchases and price promotions for eggs rather than raise prices. This suggests that—in response to price gouging litigation—food retailers are willing to accept empty shelves in lieu of increasing prices.

No Cow? Understanding US Consumer Preferences for Plant-Based over Regular Milk-Based Products

“…Recent studies report reasons for food price inflation and consumer responses to increased food prices in the US [25]. Food price inflation have been attributed to the coronavirus pandemic and consumption changes in favour of eating at home instead of going out [24][25][26].…”

“…Recent studies report reasons for food price inflation and consumer responses to increased food prices in the US [25]. Food price inflation have been attributed to the coronavirus pandemic and consumption changes in favour of eating at home instead of going out [24][25][26]. Other reasons include the Russia-Ukraine war and the boycott against Russia, as well as an ongoing drought in the United States and a series of foodborne illnesses [26,27].…”

“…Recent research indicates changes in the food baskets of US consumers, including more basic and off-brand product options [22,23]. In addition, consumers are reported to have engaged in bulk buying and panic buying, often as responses to stress associated with growing uncertainties [22,23,25,28]. Amidst the background of the reported changes in consumer behaviour and the fact that plant-based products are costlier than regular milk-based products, the following hypothesis is proposed: Hypothesis 1 (H1).…”

“…The latter is of increasing relevance as food prices have dramatically increased as the US experiences ongoing food price inflation. Recent reports evaluating US consumers' food purchases indicate that buying behaviour has been adjusted to these circumstances, primarily to save money [21][22][23][24][25]. To contribute to a more comprehensive understanding of consumer preferences for plant-based milk and dairy alternatives, the purpose of the present study is to model the factors that determine the preferences for plant-based product alternatives compared to regular dairy products in two scenarios, namely before the occurrence of food price inflation and since the occurrence of food price inflation in the US.…”