Publications
Publications
- 2021
Consumer Choice and Corporate Bankruptcy
By: Samuel Antill and Megan Hunter
Abstract
Using an incentivized randomized experiment, we estimate the causal effect of a Chapter 11 bankruptcy filing on consumer demand for the bankrupt firm's products. Knowledge of Hertz's Chapter 11 bankruptcy reduces consumers' willingness-to-pay for Hertz by 35%. We show evidence that consumers fear both (i) a liquidation preventing future relationships with a firm and (ii) a decline in quality while a firm reorganizes. Estimating a structural model of consumer demand, we quantify the large negative impact of Hertz's bankruptcy on Hertz's market share and consumer welfare. We find that educating consumers about Chapter 11 can improve consumer welfare.
Keywords
Consumer Choice; Bankruptcy; Financial Distress; Structural Estimation; Experimental Economics; Hertz; Insolvency and Bankruptcy; Consumer Behavior
Citation
Antill, Samuel, and Megan Hunter. "Consumer Choice and Corporate Bankruptcy." Working Paper, August 2021.