Retailing is an important sector of the economy: it is roughly equal in size to the manufacturing sector, and still expanding in many countries. Why do economies have such a large retail sector and what does it produce? The chapter explores this question by looking at the retail sector through the lens of household production theory. It discusses how structural changes in consumers’ time allocation impact retail strategy, and conversely, how retail innovations that make purchasing and home production more convenient impact the purchasing habits and time use of consumers. In so doing, it connects the marketing literature on retailing to the economic literatures on household economics and on time use. The chapter also provides suggestions for future research into the role of consumer time use on innovation in retailing, and vice versa.
Paulo Albuquerque and Bart J. Bronnenberg
We present an illustration of how marketing and structural models can be applied in a public policy context. We describe the demand model in Albuquerque and Bronnenberg (2012) to evaluate the impact of the 2009 federal policy measure known as the “Car Allowance Rebate System” program (or “Cash for Clunkers”) on prices and demand in the auto sector.