American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Demand Estimation under Incomplete Product Availability
American Economic Journal: Microeconomics
vol. 5,
no. 4, November 2013
(pp. 1–30)
Abstract
Incomplete product availability is an important feature of many markets, and ignoring changes in availability may bias demand estimates. We study a new dataset from a wireless inventory system on vending machines to track product availability every four hours. The data allow us to account for product availability when estimating demand, and provide valuable variation for identifying substitution patterns when products stock out. We develop a procedure that allows for changes in product availability when availability is only observed periodically. We find significant differences in demand estimates: the corrected model predicts significantly larger impacts of stock-out events on profitability.Citation
Conlon, Christopher T., and Julie Holland Mortimer. 2013. "Demand Estimation under Incomplete Product Availability." American Economic Journal: Microeconomics, 5 (4): 1–30. DOI: 10.1257/mic.5.4.1Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D25 Intertemporal Firm Choice, Investment, Capacity, and Financing
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- L81 Retail and Wholesale Trade; e-Commerce
- M11 Production Management
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