NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Christopher Conlon

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Working Papers

December 2013Efficiency and Foreclosure Effects of All-Units Discounts: Empirical Evidence
with Julie Holland Mortimer: w19709
All-Units Discounts are vertical rebates in which a manufacturer pays a retailer a linear wholesale price up to a quantity threshold; beyond the threshold, the retailer receives a discount on all future and previous units. Such contracts, which are common in many industries, potentially have both efficiency and foreclosure effects. Using a new dataset containing detailed information on the sales and rebate payments of a retailer in the confections industry, we estimate structural models of demand and retailer effort to quantify the efficiency gains induced by the contract. We show how the contract allocates the cost of a stock-out between the manufacturer and retailer, and find evidence that the contract increases industry profitability, but fails to implement the product assortment that m...
An Experimental Approach to Merger Evaluation
with Julie Holland Mortimer: w19703
The 2010 Department of Justice and Federal Trade Commission Horizontal Merger Guidelines lay out a new standard for assessing proposed mergers in markets with differentiated products. This new standard is based on a measure of ``upward pricing pressure,'' (UPP) and the calculation of a ``gross upward pricing pressure index'' (GUPPI) in turn relies on a ``diversion ratio,'' which measures the fraction of consumers of one product that switch to another product when the price of the first product increases. One way to calculate a diversion ratio is to estimate own- and cross-price elasticities. An alternative (and more direct) way to gain insight into diversion is to exogenously remove a product from the market and observe the set of products to which consumers actually switch. In the past, ...
October 2010Effects of Product Availability: Experimental Evidence
with Julie Holland Mortimer: w16506
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.
September 2008Demand Estimation Under Incomplete Product Availability
with Julie Holland Mortimer: w14315
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 allow 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.

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