How much and how often: A model of repeated consumption with endogenous consumption frequency
AbstractWe study the consumption pattern for a "repeated good" in which individuals choose both consumption frequency and intensity in response to income, price and setup cost. Results include that increased setup costs reduce frequency and increase intensity, and that the effects of a setup cost increase are qualitatively different from those of a price increase or an income reduction.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 110 (2011)
Issue (Month): 3 (March)
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Web page: http://www.elsevier.com/locate/ecolet
Consumer choice Endogenous consumption frequency Setup cost Alchian-Allen Theorem;
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- Cowen, Tyler & Tabarrok, Alexander, 1995. "Good Grapes and Bad Lobsters: Applying the Alchian and Allen Theorem," Economic Inquiry, Western Economic Association International, vol. 33(2), pages 253-56, April.
- Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-38, February.
- Saving, Thomas R, 1971. "Transactions Costs and the Demand for Money," American Economic Review, American Economic Association, vol. 61(3), pages 407-20, June.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
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