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Unveiling Demand Function Dynamics: A Scalable, Cross-Market Estimation Using Point-of-Sale Data

日本語

February 12, 2026
Ryotaro Todoroki*1
Kazuki Otaka*2

Abstract

This study examines the dynamics of demand functions for a wide range of consumer products in Japan over the past three decades. Using highly granular point-of-sale (POS) data and machine learning techniques, we estimate key demand function parameters, namely price elasticity and demand curvature, from which we also derive markups for each market and period. We find that while the aggregate-level median price elasticity and markups remained relatively stable over the long term, with substantial cross-product heterogeneity underlying this stability, recent years have seen a modest decrease in the absolute value of median price elasticity and a corresponding increase in markups. Furthermore, our analysis shows that demand curvature increased until the mid-2010s and subsequently declined. Importantly, our panel analysis reveals a significant relationship between the estimated demand function parameters and key factors, including labor force participation and market concentration. In particular, we identify the rise in female labor force participation as a key driver of the recent decline in both absolute price elasticity and demand curvature. These findings suggest that these shifts in socio-economic factors, such as increased labor participation, might have altered consumer behavior, leading to diminished price sensitivity.

JEL classification
C55, D12, D43, L11, L13, L16

Keywords
Consumer behavior, Kinked demand curve, Markups, Machine learning

The authors thank Kosuke Aoki, Keisuke Kawata, Yukinobu Kitamura, Naoki Wakamori, Ryo Jinnai, Kozo Ueda, and staff members of the Bank of Japan for their valuable comments. We also thank seminar participants at SWET 2025 and Waseda University for helpful discussions. The authors also thank the Ministry of Economy, Trade and Industry (METI) for providing access to the data from the Basic Survey of Japanese Business Structure and Activities, and the Panel Data Research Center, Institute for Economic Studies, Keio University for providing the microdata from the Japan Household Panel Survey (JHPS/KHPS). Any remaining errors are attributable to the authors. The views expressed in this paper are those of the authors and do not necessarily reflect the official views of the Bank of Japan.

  1. *1Research and Statistics Department, Bank of Japan
    E-mail : ryoutarou.todoroki@boj.or.jp
  2. *2Research and Statistics Department, Bank of Japan (currently at Institute for Monetary and Economic Studies)
    E-mail : kazuki.ootaka@boj.or.jp

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