Regulation and Resale Behavior in Online Marketplace during the COVID-19 Pandemic

Abstract

In the early stages of the COVID-19 pandemic, masks and alcohol sanitizers were hoarded and resold in online markets. In Japan, restrictions were imposed on such resale. In this paper, we examine the effects of the resale regulations on the behavior of economic agents and changes in their surplus. We collected data on auctions and fixed-price sales of anhydrous ethanol in the periods before and after the resale regulation. As a result, we found that in fixed-price sales, sellers lowered their prices by nearly JPY 3,000 from the price that maximized their expected revenues due to the resale restrictions. We also found that, on average, the regulation reduced the consumer surplus and the producer surplus by about JPY 770 and JPY 1,300, respectively.