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Effects of Product Availability: Experimental Evidence

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  • Christopher T. Conlon
  • Julie Holland Mortimer

Abstract

Product availability impacts many industries such as transportation, events, and retail, yet little empirical evidence documents the importance of stocking decisions for firm profits, vertical relationships, or consumers. We conduct several experiments, exogenously removing top-selling products from a set of vending machines and analyzing substitution patterns and profit impacts of the changed product availability using nonparametric analyses and structural demand estimation. We find substantial switching to alternate products, and evidence of misaligned incentives between upstream and downstream firms in the choice of which products to carry. We discuss the trade-offs of both empirical approaches for analyzing product availability effects generally.

Suggested Citation

  • Christopher T. Conlon & Julie Holland Mortimer, 2010. "Effects of Product Availability: Experimental Evidence," NBER Working Papers 16506, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16506
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    Cited by:

    1. Christopher Conlon & Julie Holland Mortimer, 2021. "Empirical properties of diversion ratios," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 693-726, December.
    2. Tobias Salz & Emanuel Vespa, 2020. "Estimating dynamic games of oligopolistic competition: an experimental investigation," RAND Journal of Economics, RAND Corporation, vol. 51(2), pages 447-469, June.
    3. Christopher T. Conlon & Julie Holland Mortimer, 2021. "Efficiency and Foreclosure Effects of Vertical Rebates: Empirical Evidence," Journal of Political Economy, University of Chicago Press, vol. 129(12), pages 3357-3404.
    4. Hickman, William & Mortimer, Julie Holland, 2016. "Demand Estimation with Availability Variation," SocArXiv qe69j, Center for Open Science.
    5. Friberg, Richard & Romahn, André, 2015. "Divestiture requirements as a tool for competition policy: A case from the Swedish beer market," International Journal of Industrial Organization, Elsevier, vol. 42(C), pages 1-18.
    6. Mehmet Sekip Altug & Tolga Aydinliyim, 2016. "Counteracting Strategic Purchase Deferrals: The Impact of Online Retailers’ Return Policy Decisions," Manufacturing & Service Operations Management, INFORMS, vol. 18(3), pages 376-392, July.
    7. Christopher T. Conlon & Julie Holland Mortimer, 2013. "An Experimental Approach to Merger Evaluation," NBER Working Papers 19703, National Bureau of Economic Research, Inc.
    8. Mingzheng Wang & Mengru Ma & Xiaohang Yue & Samar Mukhopadhyay, 2016. "A capacitated firm’s pricing strategies for strategic consumers with different search costs," Annals of Operations Research, Springer, vol. 240(2), pages 731-760, May.
    9. Antonio Rosato, 2016. "Selling substitute goods to loss-averse consumers: limited availability, bargains, and rip-offs," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 709-733, August.
    10. Julie Mortimer & Christopher Conlon, 2014. "Efficiency and Foreclosure Effects of All-Units Discounts: Empirical Evidence," 2014 Meeting Papers 1177, Society for Economic Dynamics.
    11. K. Sudhir & Nathan Yang, 2014. "Exploiting the Choice-Consumption Mismatch: A New Approach to Disentangle State Dependence and Heterogeneity," Cowles Foundation Discussion Papers 1941, Cowles Foundation for Research in Economics, Yale University.

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