Unwrapping the Hot-Toy Problem: An Analysis of Peak Demand and Price Dispersion in the Holiday Market for Zhu Zhu Pets

Abstract

The sold out toy is a recurring theme during the holiday season, so why donÕt manufacturers and retailers increase the price of these holiday season sellout products? This work considers whether a larger shortage implies a more elastic demand curve and a smaller opportunity cost to the manufacturer and retailers of maintaining the shortage than might be expected. It does so by using the dispersion of final bid prices on eBay of the Zhu Zhu Pet Hamster Pipsqueak as a measurement of consumer price sensitivity. It also considers whether weekends represent min-demand peaks.