Sales and Consumer Inventory
AbstractTemporary price reductions (sales) are quite common for many goods and usually result in an increase in the quantity sold. We explore whether the data support the hypothesis that these increases are, at least partly, due to dynamic consumer behavior: at low prices consumers stockpile for future consumption. This effect, if present, has broad implications for interpretation of demand estimates. We construct a dynamic model of consumer choice and use it to derive testable predictions. We test the implications of the model using two years of store-level scanner data and data on the purchases of a panel of households over the same time. The results support the existence of household stockpiling behavior.
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Bibliographic InfoPaper provided by Competition Policy Center, Institute for Business and Economic Research, UC Berkeley in its series Competition Policy Center, Working Paper Series with number qt0p18h2d8.
Date of creation: 01 Sep 2001
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consumer behavior; consumer choice; stockpiling;
Other versions of this item:
- Hendel, Igal & Nevo, Aviv, 2001. "Sales and Consumer Inventory," Department of Economics, Working Paper Series qt11x3d68b, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Iga Hendel and Aviv Nevo., 2001. "Sales and Consumer Inventory," Economics Working Papers E01-307, University of California at Berkeley.
- Iga Hendel & Aviv Nevo, 2002. "Sales and Consumer Inventory," Microeconomics 0201001, EconWPA.
- Igal Hendel & Aviv Nevo, 2002. "Sales and Consumer Inventory," NBER Working Papers 9048, National Bureau of Economic Research, Inc.
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