UBC Theses and Dissertations

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UBC Theses and Dissertations

Essays in industrial organization Graves, Jonathan Lewis


Chapter 2 examines the role of sales (temporary price reductions) in the pricing of perishable products. When products can be stored, periodic sales are explained using inventories: the ability to store lets consumers wait for better prices. When consumers differ in their ability to wait, firms keep prices regularly high, using sales to target the low prices to the most patient consumers. This explanation is not reasonable for perishable goods, since they cannot be stored. Using a retail dataset, I show that nonetheless a cyclic pattern of sales is a major feature of how perishable products are priced. I explain this pattern using a dynamic model of loss leadership. I then test my model using grocery store data. Chapter 3 studies large contributions to crowdfunding projects and their impact on project success. I find large contributions display a preference for being effective in helping projects succeed: they are often pivotal in the success of a project. These findings match predictions from a consumer choice explanation of how large contributions are made. I then examine the role large contributions play in project success. Using an instrumental variables approach, I show the ability of a project to attract large contributors is important: a project is 40-60% more likely to succeed if they can attract a large contributor. This inverts the logic of crowdfunding: the crowd may be important, but the success of many projects is driven by large contributors. Chapter 4 develops a method for determining whether a given observation is a sale or not in the context of a sequence of prices for a retail product. This classification, based on a hidden Markov model framework has the advantage of using all the information available or classifying sales. I develop identification requirements for this method, and illustrate its utility in directly testing questions of correlation for sales and other variables: allowing models to be evaluated without reduced-form analysis. I perform simulations, demonstrating the method’s accuracy method in classifying sales and understanding correlations. This chapter adds to the toolbox industrial economists have for studying sales, with advantages over existing methods of sales classification.

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