University of Mannheim Department of Economics
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Economics, 2017, 48: 856-873.
When consumers stockpile, static demand models overestimate long-term price responses. This paper presents a dynamic model of demand with consumer inventories and proposes a shortcut to estimate the long-run price elasticities without having to solve the dynamic program. Using French data on food purchases, I find elasticities consistent with those that result from the full-blown estimations found in the literature.
Consumers' Quality Choices during Demand Peaks, International Journal of Industrial Organization, 2016, 44: 154-162.
For a number of product categories, average prices decrease when demand exogenously increases. The literature disagrees on whether this is due to firms' reaction to the high demand or changes in consumer behavior. I propose a strategy that enables identification of supply and demand movements which consists of studying unpredictable and short-lived exogenous demand shocks. In these periods, firms do not have time to adjust pricing or advertising strategies and most activity comes from changes in consumer behavior. My model shows that at periods of exogenous high demand, consumers migrate towards cheaper lower quality products. I focus on ice cream purchases, which has a seasonal peak during the summer and in less predictable periods of unseasonably high temperatures. Using individual level data, I test model implications and estimate structural parameters, finding evidence consistent with consumers quality shifts. I also reject alternative supply side theories as the main drivers of the observed price dynamics.
Gender Bias in Intrahousehold Allocation: Evidence from an Unintentional Experiment (with Luis Henrique B. Braido and Pedro Olinto) , Review of Economics and Statistics, 2012, 94 (2): 552-565.
We use data from a Brazilian social program to investigate the existence of gender bias in intrahousehold allocation of resources. The program was designed to make monetary transfers directly to mothers and pregnant women in the poorest households of Brazil. Bureaucratic mistakes, beyond the control of the applicants, have accidentally excluded many households who actually applied and were accepted to the program. These unintentional exclusions formed a control group in the molds of random experiments. This is used here to identify the impact of an exogenous variation in female nonlabor income on household decisions. Our results do not support the existence of gender-specific effects on household decisions.
Price dispersion and informational frictions: evidence from supermarket purchases (with Pierre Dubois) revise and resubmit - American Economic Journal - Microeconomics
Traditional demand models assume that consumers are perfectly informed about product characteristics, including price. However, this assumption may be too strong. Unannounced sales are a common supermarket practice. As we show, retailers frequently change position in the price rankings, thus making it unlikely that consumers are aware of all deals offered in each period. Further empirical evidence on consumer behavior is also consistent with a model with price information frictions. We develop such a model for horizontally differentiated products and structurally estimate the search cost distribution. The results show that in equilibrium, consumers observe a very limited number of prices before making a purchase decision, which implies that imperfect information is indeed important and that local market power is potentially high. We also show that a full information demand model yields severely biased price elasticities.
Consumers' Costly Responses to Product-Harm Crises (joint with Rosa Ferrer) revise and resubmit - Management Science new version coming soon
Using an ideal setting from a major food safety crisis, we estimate a full demand model for the unsafe product and its substitutes and recover consumers' preference parameters. Counterfactual exercises quantify the relevance of different mechanisms --changes in safety perceptions, idiosyncratic tastes, nutritional characteristics, and prices-- driving consumers' response. We find that consumers' reaction is limited by their taste for the product and its nutritional characteristics. Due to the costs associated with switching away from the affected product, the decline in demand following a product-harm crisis tends to understate the true weight of such events in consumers' utility. Indeed, we find that a large fraction of consumers are unresponsive to the crisis even when they significantly downgrade their product safety perception. For an accurate assessment of the crisis, managerial strategies should therefore account for how different demand drivers bind consumers' substitution patterns.
We investigate whether penalizing wrong answers on multiple-choice tests (``negative marking'') makes females relatively worse off compared to males (the comparison being no penalties for wrong answers). With a cohort of more than 500 undergraduate students at a major Spanish university, we conducted a field experiment in the Microeconomics course. We created a final exam, which was composed of two parts: one with penalties for wrong answers and one without. Students were randomly allocated to different exam permutations, which differed in the questions that carried penalties for wrong answers. We find that the penalties did not harm female students. Females performed better than males on both parts of the exam and did so to a greater extent on the part with penalties. Whereas risk aversion did not affect overall scores (despite affecting answering behavior), ability did. High-ability students performed relatively better with negative marking, and these were more likely to be women.
Work in progress
The Competitive Effects of Subprime Credit for Consumption
Using data from Brazil, I study the effect of entry of large subprime lenders in markets where the population was previously credit constrained on: (i) consumers’ purchase patterns; (ii) consumers’ welfare measures; and (iii) the local competitive environment.
The market for cigarettes and demand when there are stockouts
Using Spanish cigarette vending machine, we develop a demand model that allows for stockouts, a common feature in many markets and that, if ignored, could lead to biased price elasticity measure if ignored. The modell uses stockouts as an additional source of variation for identification, which is especially relevant for estimation of demand for products which experience infrequent price changes. We use data on spanish cigarette vending machines, which includes not only information on stockouts but also the number of lost sales per product due to a stockouts event. We estimate the preference parameters of consumers' and use them to derive health policy implications.