Should-Read: Xavier Jaravel: The Unequal Gains from Product Innovations: Evidence from the US Retail Sector

Should-Read: Xavier Jaravel: : The Unequal Gains from Product Innovations: Evidence from the US Retail Sector: “From 2004 to 2013 higher-income households systematically experienced a larger increase in product variety and a lower inflation rate for continuing products…

…Annual inflation was 0.65 percentage points lower for households earning above $100,000 a year, relative to households making less than $30,000 a year…. The relative demand for products consumed by high-income households increased because of growth and rising inequality; (B) in response, firms introduced more new products catering to such households; (C) as a result, continuing products in these market segments lowered their price due to increased competitive pressure…. Increasing relative demand leads to more new products and lower inflation for continuing products, implying that the long-term supply curve is downward-sloping…