EconPapers    
Economics at your fingertips  
 

Estimating store choices with endogenous shopping bundles and price uncertainty

Hyunchul Kim and Kyoo il Kim

International Journal of Industrial Organization, 2017, vol. 54, issue C, 1-36

Abstract: We develop a structural model of retail store choices for which household shopping plans and price beliefs are endogenously determined. In our model individual households make their store choices based on their expected basket costs, which are determined by their shopping plans and price beliefs. Previous studies use realized purchases as a proxy for unobserved shopping lists and also assume homogenous price expectation across all households over the entire sample period. Our approach improves the measures of expected basket costs by estimating intended shopping lists of households using a duration model and also by constructing household-, time-, store-, and goods-specific price expectations. In our empirical application using a scanner data set, we find that the store choices become significantly more elastic to prices when the correction is applied.

Keywords: Store choice; Expected basket cost; Price expectation; Consumer demand; Supermarket industry (search for similar items in EconPapers)
JEL-codes: D1 D8 L1 L8 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167718717303715
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:54:y:2017:i:c:p:1-36

Access Statistics for this article

International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal

More articles in International Journal of Industrial Organization from Elsevier
Series data maintained by Dana Niculescu ().

 
Page updated 2017-12-30
Handle: RePEc:eee:indorg:v:54:y:2017:i:c:p:1-36