Demand Estimation under Incomplete Product Availability

52 Pages Posted: 25 Apr 2009 Last revised: 5 May 2010

See all articles by Christopher T. Conlon

Christopher T. Conlon

Columbia University

Julie H. Mortimer

Boston College; National Bureau of Economic Research (NBER); Harvard University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: May 3, 2010

Abstract

Incomplete product availability is an important feature of many markets; ignoring changes in availability may bias demand estimates. We study a new dataset from a wireless inventory system installed on 54 vending machines to track product availability every four hours. The data allows us to account for product availability when estimating demand, and provides a valuable source of variation for identifying substitution patterns. We develop a procedure that allows for changes in product availability even when availability is only observed periodically. We find significant differences in demand estimates, with the corrected model predicting significantly larger impacts of stock-outs on profitability.

Keywords: stock outs, demand estimation, product availability

Suggested Citation

Conlon, Christopher T. and Mortimer, Julie H., Demand Estimation under Incomplete Product Availability (May 3, 2010). Harvard Institute of Economic Research Discussion Paper No. 2174. Available at SSRN: https://ssrn.com/abstract=1394476 or http://dx.doi.org/10.2139/ssrn.1394476

Christopher T. Conlon

Columbia University ( email )

420 W 118th St
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United States

Julie H. Mortimer (Contact Author)

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-3676 (Phone)

HOME PAGE: http://fmwww.bc.edu/ec/mortimer.php

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

Harvard University - Department of Economics ( email )

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Cambridge, MA 02138
United States

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