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The Demand for Food Products : An Analysis of Interpurchase Times and Purchased Quantities

Author

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  • C, Boizot

    (Crest)

  • Jean-Marc Robin

    (Crest)

  • Michael Visser

    (Crest)

Abstract

In this paper we study household purchase behaviour of storable food products. An inventory model is developed in which the household chooses an optimal stock level of the product. Storage of the product is costly, there is a fixed cost per purchase occasion, and the market price is sometimes discounted because of price promotions. We show that the optimal purchase policy is an s, S policy. The model is used to derive predictions on the correlations between interpurchase times and purchased quantities on the one hand, and prices on the other. These predictions are empirically verified using consumer panel data.
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Suggested Citation

  • C, Boizot & Jean-Marc Robin & Michael Visser, 1997. "The Demand for Food Products : An Analysis of Interpurchase Times and Purchased Quantities," Working Papers 97-48, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:97-48
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    Cited by:

    1. Igal Hendel & Aviv Nevo, 2006. "Measuring the Implications of Sales and Consumer Inventory Behavior," Econometrica, Econometric Society, vol. 74(6), pages 1637-1673, November.
    2. Igal Hendel & Aviv Nevo, 2006. "Sales and consumer inventory," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 543-561, September.
    3. Pozzi, Andrea, 2013. "E-commerce as a stockpiling technology: Implications for consumer savings," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 677-689.
    4. Victor Aguirregabiria & Victor Aguirregabiria & Aviv Nevo & Aviv Nevo, 2010. "Recent Developments in Empirical IO: Dynamic Demand and Dynamic Games," Working Papers tecipa-419, University of Toronto, Department of Economics.
    5. Rachel Griffith & Ephraim Leibtag & Andrew Leicester & Aviv Nevo, 2009. "Consumer Shopping Behavior: How Much Do Consumers Save?," Journal of Economic Perspectives, American Economic Association, vol. 23(2), pages 99-120, Spring.
    6. Rachel Griffith & Ephraim Leibtag & Andrew Leicester & Aviv Nevo, 2008. "Timing and Quantity of Consumer Purchases and the Consumer Price Index," NBER Working Papers 14433, National Bureau of Economic Research, Inc.
    7. Dong, Diansheng & Stewart, Hayden & McLaughlin, Patrick W., 2017. "A New Approach for Modeling Household Food Demand with Panel Data: The Case of Cold Cereals," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258195, Agricultural and Applied Economics Association.
    8. Igal Hendel & Aviv Nevo, 2013. "Intertemporal Price Discrimination in Storable Goods Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2722-2751, December.
    9. Thierry Magnac & Pierre Dubois, 2016. "Consumer Demand with Unobserved Stockpiling and Intertemporal Price Discrimination," 2016 Meeting Papers 451, Society for Economic Dynamics.
    10. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics,in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier.
    11. Tiago Pires, 2016. "Costly search and consideration sets in storable goods markets," Quantitative Marketing and Economics (QME), Springer, vol. 14(3), pages 157-193, September.
    12. Diansheng Dong & Harry Kaiser, 2008. "Studying household purchasing and nonpurchasing behaviour for a frequently consumed commodity: two models," Applied Economics, Taylor & Francis Journals, vol. 40(15), pages 1941-1951.
    13. Donna, Javier & Espin-Sanchez, Jose, 2014. "The Illiquidity of Water Markets," MPRA Paper 55078, University Library of Munich, Germany.
    14. repec:oup:ajagec:v:99:y:2017:i:5:p:1172-1187. is not listed on IDEAS
    15. Dong, Diansheng & Stewart, Hayden, 2008. "Household Food Purchase Patterns: The Case of Vegetables," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6428, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Février, Philippe & Wilner, Lionel, 2016. "Do consumers correctly expect price reductions? Testing dynamic behavior," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 25-40.

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