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Consumer Preferences, Consumer Behavior and Producer Responses in the Retail Sector

Dong, Xiao
http://rave.ohiolink.edu/etdc/view?acc_num=osu1572935866720799

Abstract Details

2019, Doctor of Philosophy, Ohio State University, Agricultural, Environmental and Developmental Economics.
In the three chapters below, I examine consumer preferences, behavior, and producer responses surrounding recent developments, issues, and research in energy efficiency, local foods, and non-price competition. The first chapter investigates consumer stockpiling behavior in anticipation of the United States Energy Independence and Security Act (EISA) energy mandate that effectively banned production and import of incandescent light bulbs. I estimate that consumers increased purchases of 100-watt incandescent light bulbs by 96.9% in anticipation of the EISA ban. My results also indicate that stockpiling in anticipation of the ban reduced the estimated private household energy cost savings of the EISA ban by $589 million in the United States and reduced social carbon cost savings by $166 million in the United States. This study shows how utility maximizing consumers undertake behavioral responses through intertemporal substitution as a form of averting behavior in anticipation of a product ban. From a policy perspective, status-quo estimates of the short and medium run potential gains from EISA driven energy conversion were likely overly optimistic when failing to account for the dampening effects of consumer stockpiling. For the second chapter, I examine how the preference for local relates to the preference for variety or flavors in a product line for packaged foods. I use a Berry, Levinsohn, and Pakes (Berry, Levinsohn, and Pakes 1995) demand estimation to estimate consumer willingness to pay for local, variety and their joint effect in ice cream while controlling for price endogeneity and allowing for flexible substitution patterns. I estimate that Ohio consumers are on average willing to pay 7% more ($0.04 per serving) for local brands and willing to pay 2% ($0.01) more for additional flavors. I also find the willingness to pay for additional flavors is increased by 60% ($0.006) if the ice cream is local. My findings provide new insights on consumer preferences that are relevant for potential entrants looking to enter the local pre-packaged retail foods market. The third chapter investigates how incumbent brands react to entry and increased competition in a retail setting. I extend on the entry response literature by focusing on the non-price response of increased quality through increasing variety (product line length). I use the staggered entry of Jeni’s Ice Cream in Kroger supermarkets as a quasi-natural experiment and empirically examine if incumbent ice cream brands respond to entry of a new local and super premium ice cream by increasing the number of choices. Using difference-in-difference and triple difference estimators, I find that incumbent brands improved brand quality through increased variety with most of the response coming from super premium ice cream, which increased variety on average by 2.5 product choices. These findings contribute new insights in the literature regarding quality changes from increased competition and the corresponding welfare impacts of increased consumer welfare and increased producer efficiency of providing quality from increased competition.
H. Allen Klaiber (Advisor)
108 p.
Agricultural Economics; Economics; Energy; Environmental Economics

Recommended Citations

Citations

  • Dong, X. (2019). Consumer Preferences, Consumer Behavior and Producer Responses in the Retail Sector [Doctoral dissertation, Ohio State University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=osu1572935866720799

    APA Style (7th edition)

  • Dong, Xiao. Consumer Preferences, Consumer Behavior and Producer Responses in the Retail Sector. 2019. Ohio State University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=osu1572935866720799.

    MLA Style (8th edition)

  • Dong, Xiao. "Consumer Preferences, Consumer Behavior and Producer Responses in the Retail Sector." Doctoral dissertation, Ohio State University, 2019. http://rave.ohiolink.edu/etdc/view?acc_num=osu1572935866720799

    Chicago Manual of Style (17th edition)

osu1572935866720799
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