The value of firm flexibility under extreme positive demand shocks: COVID-19 and toilet paper panic purchases

M.  Koppenberg; A.K. Mishra; T.P.F. Dalhaus; S. Hirsch

doi:10.1016/j.econlet.2022.110965

The value of firm flexibility under extreme positive demand shocks: COVID-19 and toilet paper panic purchases

M. Koppenberg^*, A.K. Mishra, T.P.F. Dalhaus, S. Hirsch

^*Corresponding author for this work

Business Economics

Research output: Contribution to journal › Article › Academic › peer-review

2 Citations (Scopus)

Abstract

We estimate the relationship between firms’ production flexibility and profitability under extreme positive demand shocks using the European toilet paper manufacturing industry in 2020 as a case study. This industry faced extreme increases in demand due to consumers panic purchasing toilet paper after the outbreak of the COVID-19 pandemic. Our estimates show that flexibility and profitability are positively related. This is even more pronounced in times of an extreme positive demand shock when a ten percent improvement in flexibility is associated with a five percent increase in profitability.

Original language	English
Article number	110965
Journal	Economics Letters
Volume	222
DOIs	https://doi.org/10.1016/j.econlet.2022.110965
Publication status	Published - Jan 2023

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title = "The value of firm flexibility under extreme positive demand shocks: COVID-19 and toilet paper panic purchases",

abstract = "We estimate the relationship between firms{\textquoteright} production flexibility and profitability under extreme positive demand shocks using the European toilet paper manufacturing industry in 2020 as a case study. This industry faced extreme increases in demand due to consumers panic purchasing toilet paper after the outbreak of the COVID-19 pandemic. Our estimates show that flexibility and profitability are positively related. This is even more pronounced in times of an extreme positive demand shock when a ten percent improvement in flexibility is associated with a five percent increase in profitability.",

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AU - Dalhaus, T.P.F.

AU - Hirsch, S.

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N2 - We estimate the relationship between firms’ production flexibility and profitability under extreme positive demand shocks using the European toilet paper manufacturing industry in 2020 as a case study. This industry faced extreme increases in demand due to consumers panic purchasing toilet paper after the outbreak of the COVID-19 pandemic. Our estimates show that flexibility and profitability are positively related. This is even more pronounced in times of an extreme positive demand shock when a ten percent improvement in flexibility is associated with a five percent increase in profitability.

AB - We estimate the relationship between firms’ production flexibility and profitability under extreme positive demand shocks using the European toilet paper manufacturing industry in 2020 as a case study. This industry faced extreme increases in demand due to consumers panic purchasing toilet paper after the outbreak of the COVID-19 pandemic. Our estimates show that flexibility and profitability are positively related. This is even more pronounced in times of an extreme positive demand shock when a ten percent improvement in flexibility is associated with a five percent increase in profitability.

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JO - Economics Letters

JF - Economics Letters

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The value of firm flexibility under extreme positive demand shocks: COVID-19 and toilet paper panic purchases

Abstract

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