Abstract
Despite the importance of product returns, several less well understood issues still remain. In this paper, we propose a dynamic structural model that characterizes consumers’ sequential shopping trips for purchases and/or returns. We calibrate our proposed model to individual panel data in which we observe each consumer’s sequential shopping trips, including the number of products purchased and/or returned at each trip. Through our simulations, we find that product returns can also lead to desirable outcomes for retailers and that the ability to return purchased products incentivizes consumers to make more shopping trips and thus purchase more. Motivated by these observations, we also examine two possible return-based targeting policies: (1) targeted reduction of return cost and (2) targeted price promotion on return trips.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
