In Economics What Is Hoarding?

Hoarding is the purchase and warehousing of large quantities of a commodity by a speculator with the intent of benefiting from future price increases. The term hoarding is most frequently applied to buying commodities, especially gold. However, hoarding is sometimes used in other economic contexts.

Is hoarding an economic problem?

Secondary economic effects result from hoarding. Hoarding is an increase in demand. In the short-run with supply fixed, the price of the hoarded good would increase. ... With every increase-in demand, the price of the hoarded good would continue rising producing inflation.

What are the causes of hoarding in economics?

In most cases, it happens because an individual or company fears what could happen in the future – lack of funds, higher stock prices, etc. Hoarding crosses into another category altogether when a company uses it as a business strategy to manipulate the market. The practice is known as “cornering the market.