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

Benjamin Faber and Thibault Fally

No 12209, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A growing literature has documented the role of firm heterogeneity within sectors for nominal income inequality. This paper explores the implications for household price indices across the income distribution. Using detailed matched US home and store scanner microdata, we present evidence that rich and poor households source their consumption from different parts of 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 endogenously 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 (search for similar items in EconPapers)
JEL-codes: E31 F15 F61 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-bec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

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Related works:
Journal Article: Firm Heterogeneity in Consumption Baskets: Evidence from Home and Store Scanner Data (2022)
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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