Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data

Benjamin Faber and Thibault Fally

The Review of Economic Studies, 2022, vol. 89, issue 3, 1420-1459

Abstract: A growing literature has documented the role of firm heterogeneity within sectors for nominal income inequality. This article explores the implications for household price indices across the income distribution. Using detailed matched U.S. home and store scanner microdata, we present evidence that rich and poor households source their consumption differently across the firm size distribution within disaggregated product groups. We use the data to examine alternative explanations, propose a tractable quantitative model with two-sided heterogeneity that rationalizes the observed moments, and calibrate it to explore general equilibrium counterfactuals. We find that larger, more productive firms sort into catering to the taste of richer households, and that this gives rise to asymmetric effects on household price indices. We quantify these effects in the context of policy counterfactuals that affect the distribution of disposable incomes on the demand side or profits across firms on the supply side.

Keywords: Firm heterogeneity; Real income inequality; Household price indices; Scanner data; F15; F61; E31 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2017)
Working Paper: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:89:y:2022:i:3:p:1420-1459.

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