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 ...

A vexing challenge when using the utility-maximization framework to estimate consumers’ decisions on which set of goods to purchase and how much quantity to buy, is obtaining a functional form of the utility that satisfies three criteria: tractability, flexibility and global-regularity. Flexibility refers to the ability of utility function to impose minimal prior restrictions on demand elastici...

This paper uses data from the Current Population Survey to analyze determinants of cigarette demand. Price elasticities for smoking participation and quantity of cigarettes smoked are between y0.4 and y0.6 for both men and women. These effects diminish for high-income individuals. The family earnings elasticity of demand is weak, but education has strong negative effects on smoking, especially ...

This paper summarizes price elasticities and cross elasticities for use in public transit planning. It describes how elasticities are used, and summarizes previous research on transit elasticities. Commonly used transit elasticity values are largely based on studies of shortand medium-run impacts performed decades ago when real incomes where lower and a larger portion of the population was tran...

Temporary price reductions (sales) are common for many goods and naturally result in large increase in the quantity sold. In previous work we found that the data support the hypothesis that these increases are, at least partly, due to dynamic consumer behavior: at low prices consumers stockpile for future consumption. In this paper we quantify the magnitude of the effect and derive the quantita...

Is the cost of living higher for the poor? Recent studies based on unit values (the ratio of expenditure to quantity) suggest that poor households pay substantially higher prices because liquidity constraints force them to purchase goods in small quantities and not realize bulk discounts. Unit values are subject to several biases and reflect economizing choices made by households, so they may n...

This study estimates a set of unconditional own-price and expenditure elasticities across time for 49 processed food categories using scanner data and the FAST multistage demand system with fixed effects across time. Estimated own-price elasticities are generally much larger, in absolute terms, than previous estimates, while our expenditure elasticities are generally much lower. The use of disa...