Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data

No 23101, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A growing literature has documented the role of firm heterogeneity within sectors for nominal income inequality. This paper explores the implications for household price indices across the income distribution. Using detailed matched US home and store scanner microdata, we present evidence that rich and poor households source their consumption from different parts of the firm size distribution within disaggregated product groups. We use the data to examine alternative explanations, propose a tractable quantitative model with two-sided heterogeneity that rationalizes the observed moments, and calibrate it to explore general-equilibrium counterfactuals. We find that larger, more productive firms endogenously sort into catering to the taste of richer households, and that this gives rise to asymmetric effects on household price indices. We quantify these effects in the context of policy counterfactuals that affect the distribution of disposable incomes on the demand side or profits across firms on the supply side.

JEL-codes: E31 F61 O51 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-bec and nep-mac
Note: EFG ITI
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Citations: View citations in EconPapers (38)

Published as Benjamin Faber & Thibault Fally, 2022. "Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data," The Review of Economic Studies, vol 89(3), pages 1420-1459.

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Related works:
Journal Article: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2022)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2016)
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