The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Nov, 2006, Volume 74, Issue 6
https://doi.org/10.1111/j.1468-0262.2006.00721.x
p. 1637-1673
Igal Hendel, Aviv Nevo
Temporary price reductions (sales) are common for many goods and naturally result in large increases in the quantity sold. Demand estimation based on temporary price reductions may mismeasure the long‐run responsiveness to prices. In this paper we quantify the extent of the problem and assess its economic implications. We structurally estimate a dynamic model of consumer choice using two years of scanner data on the purchasing behavior of a panel of households. The results suggest that static demand estimates, which neglect dynamics, (i) overestimate own‐price elasticities by 30 percent, (ii) underestimate cross‐price elasticities by up to a factor of 5, and (iii) overestimate the substitution to the no‐purchase or outside option by over 200 percent. This suggests that policy analysis based on static elasticity estimates will underestimate price–cost margins and underpredict the effects of mergers.
The files in Supplementary Matetrial for "Measuring the Implications of Sales and Consumer Inventory Behavior" Part 1, Part 2 and Part 3, generate the main results in the Hendel-Nevo paper.The key files are:1) 1st_stage.do - which is a Stata file that runs the first stage results. It was run using STATA 8.1 SE2) run_results.m - which is a Matlab file that runs the dynamic estimation. It was run using MATLAB 6.5 with Statistics and Optimization Toolboxes.The rest of the files are input and data files called by these programs. All files, from all three zip files, should be in the same directory.
software
software
The files in Supplementary Matetrial for "Measuring the Implications of Sales and Consumer Inventory Behavior" Part 1, Part 2 and Part 3, generate the main results in the Hendel-Nevo paper.The key files are:1) 1st_stage.do - which is a Stata file that runs the first stage results. It was run using STATA 8.1 SE2) run_results.m - which is a Matlab file that runs the dynamic estimation. It was run using MATLAB 6.5 with Statistics and Optimization Toolboxes.The rest of the files are input and data files called by these programs. All files, from all three zip files, should be in the same directory.
software
software
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
