Research

Does Shrinkflation Harm Consumers?

— Universal Welfare Gains and Variety Loss in the Ice Cream Market —  Job Market Paper

Shrinkflation, the practice of reducing package size at a constant price, is widely viewed as a deceptive firm strategy. This paper challenges such consensus by reframing downsizing as the introduction of a new product variety and provides the empirical estimates of its heterogeneous welfare effects across the income distribution. Using a random coefficient demand model estimated for prepackaged ice cream, I analyze household preferences for price-size trade-offs. Counterfactual simulations reveal that all income quartiles universally prefer shrinkflation to an equivalent price increase. This welfare gain (1.09% of retail price) is non-monotonic, with the lowest-income quartiles benefiting most. When the choice set is expanded to include both inflated and shrinkflated products, all groups experience further welfare gains (0.54% of retail price). The findings indicate that the welfare harm of shrinkflation stems not from the smaller package itself, but from the associated reduction in product variety. This suggests policies should focus on preserving choice rather than just information disclosure.

In Progress

The Polarization of Grocery Shopping of Urban Residents Due to the Entry of Online Grocery

This study employs a panel regression analysis to examine the impact of online grocery platform entry on the shopping patterns of urban residents at brick-and-mortar stores during the 2010s. Using sales data from 6,000 households across 21 U.S. metropolitan areas, and identifying platform launch dates via web scraping, the analysis reveals a significant polarization in grocery expenditures. The findings indicate that because online grocery services primarily target urban centers, their entry disproportionately benefits urban consumers. Specifically, urban residents maintained their spending levels at local urban grocery stores while concurrently reducing expenditures at stores in surrounding rural areas. In effect, the introduction of online grocery services crowded out rural retailers rather than their urban competitors. These results suggest that the continued expansion of online grocery platforms could threaten the financial viability of rural stores, potentially exacerbating food access issues and increasing the risk of food deserts for rural populations.

Consumption Pattern: More than Variety

A complementary line of research examines how consumer welfare is shaped not only by prices but also by the \textbf{variety of available products}. I plan to develop a theoretical model in which consumers derive utility from diverse choices rather than bulk purchases. The framework will be based on a log-linear utility specification over prices and spatial characteristics of differentiated products. These characteristics will be combined through a CES aggregator, which includes parameters governing consumers’ preference for product variety. This analysis will bridge traditional product-differentiation theory with macro-level welfare outcomes, highlighting the welfare gains associated with maintaining a diverse product landscape.