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American Economic Journal: Microeconomics: Vol. 5 No. 4 (November 2013)

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Demand Estimation under Incomplete Product Availability

Article 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.5.4.1

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.

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Download Data Set (198.18 KB) | Online Appendix (98.41 KB) | Author Disclosure Statement(s) (107.86 KB)

Authors

Conlon, Christopher T. (Columbia U)
Mortimer, Julie Holland (Boston College)

JEL Classifications

D12: Consumer Economics: Empirical Analysis
D92: 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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