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Overdose deaths from prescription opioid pain relievers nearly quadrupled between 1999 and 2010. We study the consequences of one of the largest supply disruptions to date to abusable opioids—the introduction of an abuse-deterrent version of OxyContin in 2010. Supply-side interventions that limit access to opioids may have the unintended consequence of increasing use of substitute drugs, including heroin. Exploiting cross-state variation in OxyContin exposure, we find that states with the highest initial rates of OxyContin misuse experienced the largest increases in heroin deaths. Our results imply that the recent heroin epidemic is largely due to the reformulation of OxyContin.

How big is the elasticity of substitution between goods from different countries—the Armington elasticity? Estimates of the macroelasticity between home and imported goods are often smaller than the microelasticity between foreign sources of imports. Using new, highly disaggregate U.S. production data matched to imports and simulated data from a Melitz-style model with nested CES preferences, we explore estimation techniques for the two elasticities. For between two-thirds and three-quarters of sample goods, there is no significant difference between the macro- and microelasticities, but for the rest, the microelasticity is significantly higher, even at the same level of disaggregation.

We attribute the recent quadrupling of heroin death rates to the August 2010 reformulation of an oft-abused prescription opioid, OxyContin. The new abuse-deterrent formulation led many consumers to substitute an inexpensive alternative, heroin. Using structural break techniques and variation in substitution risk, we find that opioid consumption stops rising in August 2010, heroin deaths begin climbing the following month, and growth in heroin deaths was greater in areas with greater prereformulation access to heroin and opioids. The reformulation did not generate a reduction in combined heroin and opioid mortality: each prevented opioid death was replaced with a heroin death.

We examine how product market threats influence firm payout policy and cash holdings. Using firms' product text descriptions, we develop new measures of competitive threats. Our primary measure, product market fluidity, captures changes in rival firms' products relative to the firm's products. We show that fluidity decreases firm propensity to make payouts via dividends or repurchases and increases the cash held by firms, especially for firms with less access to financial markets. These results are consistent with the hypothesis that firms' financial policies are significantly shaped by product market threats and dynamics.

We use text-based analysis of 10-K product descriptions to examine whether firms exploit product market synergies through asset complementarities in mergers and acquisitions. Transactions are more likely between firms that use similar product market language. Transaction stock returns, ex post cash flows, and growth in product descriptions all increase for transactions with similar product market language, especially in competitive product markets. These gains are larger when targets are less similar to acquirer rivals and when targets have unique products. Our findings are consistent with firms merging and buying assets to exploit synergies to create new products that increase product differentiation.

A fast fashion system combines quick response production capabilities with enhanced product design capabilities to both design \"hot\" products that capture the latest consumer trends and exploit minimal production lead times to match supply with uncertain demand. We develop a model of such a system and compare its performance to three alternative systems: quick-response-only systems, enhanced-design-only systems, and traditional systems (which lack both enhanced design and quick response capabilities). In particular, we focus on the impact of each of the four systems on \"strategic\" or forward-looking consumer purchasing behavior, i.e., the intentional delay in purchasing an item at the full price to obtain it during an end-of-season clearance. We find that enhanced design helps to mitigate strategic behavior by offering consumers a product they value more, making them less willing to risk waiting for a clearance sale and possibly experiencing a stockout. Quick response mitigates strategic behavior through a different mechanism: by better matching supply to demand, it reduces the chance of a clearance sale. Most importantly, we find that although it is possible for quick response and enhanced design to be either complements or substitutes, the complementarity effect tends to dominate. Hence, when both quick response and enhanced design are combined in a fast fashion system, the firm typically enjoys a greater incremental increase in profit than the sum of the increases resulting from employing either system in isolation. Furthermore, complementarity is strongest when customers are very strategic. We conclude that fast fashion systems can be of significant value, particularly when consumers exhibit strategic behavior. This paper was accepted by Yossi Aviv, operations management.

[Display omitted] •We study how a multi-product retailer can best remedy potential supply disruptions•Best response is usually to shift order amounts toward the reliable supplier•But, best response can involve emphasizing sales of an unreliably-supplied product•Supply disruption risk can encourage a retailer to order more or fewer total units•Consumers, on net, may benefit from supply uncertainty Retailers often experience stockouts when a supplier fails to deliver an order. In this paper, we identify the optimal procurement policy of a multi-product retailer in the presence of possible supply disruptions. Our analysis reveals that, in anticipation of potential supply disruptions, a retailer would typically benefit from ordering more units from a reliable supplier and fewer units from an unreliable one. Furthermore, the total number of units ordered may increase when there is supply disruption risk. As a result, the retailer may overstock some items. However, there are situations in which a retailer would optimally respond to supply uncertainty by consolidating its selling strategy around the unreliable supplier’s product. Under such a strategy, we find the surprising result that the retailer reduces the amount it orders from a reliable supplier as an unreliable seller becomes even less reliable. We also explore how supply disruptions can affect a retailer’s optimal pricing strategy. We find that under certain conditions, it is beneficial for a retailer to lower its price of a substitute product when one supplier fails to deliver its product. Finally, we find that, on net, consumers may benefit from supply uncertainty even though supply disruptions eliminate access to a desirable product.

We survey 561 students from US medical schools shortly after they submit choice rankings over residencies to the National Resident Matching Program. We elicit (i) these choice rankings, (ii) anticipated subjective well-being (SWB) rankings, and (iii) expected features of the residencies (such as prestige). We find substantial differences between choice and anticipated-SWB rankings in the implied tradeoffs between residency features. In our data, evaluative SWB measures (life satisfaction and Cantril's Ladder) imply trade-offs closer to choice than does affective happiness (even time-integrated), and as close as do multimeasure SWB indices. We discuss implications for using SWB data in applied work.

This research examines consumer preference and compares their willingness-to-pay for a host of value-added attributes of processed blackberry jam, and focuses on various organic and local production location designations. Instead of being treated as a binary attribute, three levels of USDA organic are considered: 100% organic, at least 95% organic, and made with organic ingredients (at least 70% organic). For local production, three levels are also included in the analysis: cross-state region (the Ohio Valley), state boundary (state-proud logos), as well as sub-state regions. Stated-preference data collected from a choice experiment in a mail survey in Kentucky and Ohio are used. Results from the study confirm positive willingness-to-pay for both organic and local attributes. However, consumers were willing to pay comparatively more for jam produced locally in regions smaller than the border of a state compared to organic jam. Furthermore, substitution and complementary effects between food attributes were investigated. The study found strong substitution effects between organic and local production claims, an issue that has thus far received minimal treatment in the existing literature on organic and local food willingness-to-pay studies. The results indicate a large degree of overlapping values in the willingness-to-pay for these two food attributes. In addition, the \"small farm\" attribute considered in the study also appears to be a substitute for organic and local attributes, which confirms the previous belief that one of the many reasons consumers purchase organic or local products is to support small or family-owned farms.