Working Paper: NBER ID: w16506
Authors: Christopher T. Conlon; Julie Holland Mortimer
Abstract: Product availability impacts many industries such as transportation, events, and retail, yet little empirical evidence documents the importance of stocking decisions for firm profits, vertical relationships, or consumers. We conduct several experiments, exogenously removing top-selling products from a set of vending machines and analyzing substitution patterns and profit impacts of the changed product availability using nonparametric analyses and structural demand estimation. We find substantial switching to alternate products, and evidence of misaligned incentives between upstream and downstream firms in the choice of which products to carry. We discuss the trade-offs of both empirical approaches for analyzing product availability effects generally.
Keywords: product availability; vending machines; consumer behavior; firm profits; field experiments
JEL Codes: L0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Product Availability (L15) | Consumer Substitution Behavior (D11) |
| Consumer Substitution Behavior (D11) | Firm Profitability (L21) |
| Removal of Top-Selling Product (D49) | Increased Sales of Substitutes (D49) |
| Removal of Product (Y60) | Influence on Demand (D12) |
| Product Availability (L15) | Firm Profitability (L21) |