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Heterogeneous Demand Responses to Discrete Price Changes

Author

Listed:
  • Roger Hartley

    (Keele University, Department of Economics)

  • Gauthier Lanot

    (Keele University, Department of Economics)

Abstract

This paper discusses the probability of exploiting price variations that may occur during the survey period of any household expenditure survey in order to identify heterogeneous demand responses to discrete price changes. This is possible since expenditure survey contain usually a large number of observations. In this paper we illustrate the feasibility of the approach in the case pf the demand for lottery tickets. The exercise is made difficult because of the sampling process, which generates our data We purpose a reduced form model of purchase, which allows identification of heyerogeneous responses to changes in the roller state (i.e. whether last week jackpot has been added to the current jackpot).We show that there is subtantial heterogeneity in the population both in the normal expenditure levels and the reaction to a jackpot rollover.

Suggested Citation

  • Roger Hartley & Gauthier Lanot, 2000. "Heterogeneous Demand Responses to Discrete Price Changes," Keele Department of Economics Discussion Papers (1995-2001) 2000/04, Department of Economics, Keele University.
    • Handle: RePEc:kee:keeldp:2000/04
    Note: The ESRC supported the first author through grant R000236821 and the second author through Junior Fellowship H53627501695. We benefited from the comments of Paul Bingley, Care Kelly, Ian Walker and seminar participants in Keele and Manchester.
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    File URL: http://www.keele.ac.uk/depts/ec/wpapers/0004.pdf
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