Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/38644
Authors: 
Hendel, Igal
Nevo, Aviv
Year of Publication: 
2004
Series/Report no.: 
CSIO working paper 0061
Abstract: 
Temporary price reductions (sales) are common for many goods and naturally result in a large 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 economic implications. We construct a dynamic model of consumer choice, use it to derive testable predictions and test these predictions using two years of scanner data on the purchasing behavior of a panel of households. The results support the existence of household stockpiling behavior and suggest that static demand estimates may overestimate price sensitivity.
Document Type: 
Working Paper

Files in This Item:
File
Size
261.55 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.