Retailer Response to Price Gouging Litigation and Consumer Food Prices

The COVID-19 pandemic fundamentally changed how consumers obtained food with a dramatic shift out of food service and restaurants into grocery retail. At the onset of the pandemic, prices of a variety of goods, including groceries, increased rapidly. In many cases, U.S. states led lawsuits alleging price gouging behavior of food retailers and producers. In this paper, we examine the case of eggs and nd that price gouging litigations lead to a dramatic change in retailer behavior, long after the resolution of many of these disputes. We nd that retailers responded by rigidly adhering to pre-pandemic price levels for eggs, despite that fact that costs of production of eggs increased sharply during this time. We determine a breakdown in the pre-pandemic relationship between input costs and output prices for eggs. Additionally, we nd that retailers signicantly decreased their purchases of eggs and reduced the number of advertisements they placed for eggs, suggesting they are now willing to accept empty shelves in lieu of increasing prices.