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http://hdl.handle.net/10419/38644
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| Title: | | Sales and consumer inventory  |
| Authors: | | Hendel, Igal Nevo, Aviv |
| Issue Date: | | 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 |
| Appears in Collections: | | CSIO Electronic Working Papers, Northwestern University
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