Rational Addiction with an Optimal Inventory: Theory and Evidence from Japanese Daily and Monthly Purchases

Junmin Wan ()

Chapter 2 in Consumer Casualties, 2014, pp 7-28 from Palgrave Macmillan

Abstract: Abstract There are two main issues when estimating demand or supply equations. One is that the price becomes endogenous because demand and supply are determined simultaneously. Therefore, it is very difficult to estimate the demand or supply equation using aggregate data. A natural experiment constitutes a good approach for solving this problem. For example, Angrist et al. (2000) use typhoons as an instrument for price in estimating fish demand. The second issue is that the price becomes endogenous because some unobserved factors become omitted variables in the error term and correlate with the price. For example, rational consumer behavior, like hoarding when faced with a price increase, is correlated with price.

Keywords: Consumer Price Index; Future Price; Cigarette Consumption; Cigarette Price; Supply Equation (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Rational Addiction with an Optimal Inventory: Theory and Evidence from Japanese Daily and Monthly Purchases (2004)
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:pal:palchp:978-1-137-38484-3_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137384843

DOI: 10.1057/9781137384843_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().