Faber, Fally (2017) (Firm Heterogeneity in Consumption Baskets -- Evidence from Home and Store Scanner Data.)

This paper considers the relation between of firm size heterogeneity and income dispersion. Using two large panel data sets, they document a number of empirical facts about the link between these forms of heterogeneity, then build a model combining non-homothetic preferences for consumers and a Metliz’ style production environment that can match the facts.

Data

Kilts Nielsen consumer panel and retail scanner data..

• weekly upc code level data from households and firms
• contains prices and quantities
• also demographic info about households: discrete income binning, location
• Metadata about stores: brands they sell, location

Empirical finding

Main empirical finding is that wealthier households spend a higher share of consumption expenditure on goods from large firms. The relationship is monotonic across the income distribution. Finding is robust across level of aggregation (product level, product module level, aggregate spending, etc.) and time frame (6 month windows or across entire sample)

Model

TODO

Equilibrium

TODO

counter factuals

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