An Empirical Investigation into a Loss-Leader Hypothesis

I revisit a loss-leader hypothesis to test a previously untested theory within countercyclical pricing where firms target consumers of high shopping basket value. I estimate a model to predict shopping basket values of consumers to then utilize in estimating of the targeting of high valued consumers. I find that UPCs within some product categories exhibit loss-leader pricing which are goods in which high valued consumers more typically buy. I discuss paths forward for additional work that needs to be done