Sales and Consumer Inventory

Igal Hendel and Aviv Nevo

Competition Policy Center, Working Paper Series from Competition Policy Center, Institute for Business and Economic Research, UC Berkeley

Abstract: Temporary price reductions (sales) are quite common for many goods and usually result in an 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 implications for interpretation of demand estimates. We construct a dynamic model of consumer choice and use it to derive testable predictions. We test the implications of the model using two years of store-level scanner data and data on the purchases of a panel of households over the same time. The results support the existence of household stockpiling behavior.

Keywords: consumer behavior; consumer choice; stockpiling (search for similar items in EconPapers)
Date: 2001-09-01
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Sales and consumer inventory (2006)
Working Paper: Sales and Consumer Inventory (2002)
Working Paper: Sales and Consumer Inventory (2002)
Working Paper: Sales and Consumer Inventory (2001)
Working Paper: Sales and Consumer Inventory (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:compol:qt0p18h2d8

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