Hoarding (economics)

Economic hoarding refers to the concept of purchasing and storing a large amount of a resource when it is suspected that the price of the resource will increase or become scarce. Consumers are primarily hoarding resources so that they can maintain their current consumption rate in the event of a shortage (real or perceived).[1] Hoarding resources can prevent or slow products or commodities from traveling through the economy.[2] Subsequently, this may lead to the product or commodity to becomes scarce, causing the value of the resource to rise. A common method to attempt to profit off of economic hoarding is to drive the price of a product up by withholding it from the economy, and then reselling the product after its value has increased to make a profit.

The term "hoarding" may include the practice of obtaining and holding resources to create artificial scarcity, thus reducing the supply, thereby increasing the price, so that resource can be sold for profit. Artificial scarcity may also be used to help corner a market, by reducing competition via the creation of a barrier to entry. This reduction in competition could allow a monopoly or oligopoly to form.[3]

Hoarding behavior is a common response to fear, whether fear of imminent societal collapse or a simple fear of a shortage of some good. Civil unrest or natural disasters may lead people to collect foodstuffs, water, gasoline, generators, and other essentials which they believe, rightly or wrongly, may soon be in short supply. There is often an implication that hoarding occurs because individuals do not believe that the market will operate efficiently in current or expected conditions.

A feature of hoarding is that it leads to an inefficient distribution of scarce resources, making the scarcity even more of a problem. An example occurs in cities where parking is inadequate. In such a case, businesses may post signs indicating that their lot is for their employees and customers only, and all other vehicles will be towed. This prevents businesses from allowing their parking to overflow into neighboring lots when their capacity is exceeded. Thus, when the capacity is reached at one business, there may be no legal place to park, while there would have been, if hoarding had not occurred. If a single business posted those signs, it would, indeed, improve the parking situation at that business, as they could continue to park at adjacent businesses, while the others could not park in their lot. However, when everybody posts such signs, the problem becomes worse for everyone. (This example assumes all of the lots are sometimes inadequate for their businesses; in a case where a business has sufficient parking for itself, but its lot is filled with customers from others, the signs would be beneficial to that business, even if others did the same.)[4]

• Artificial scarcity
• Cornering the market
• Crisis in Venezuela
• Currency crisis
• Gresham's law
• Greed vs Fear Index
• Investing
• Land banking
• Panic buying
• Price gouging
• Survivalism
• Societal collapse