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    Business Reopening Decisions and Demand Forecasts During the COVID-19 Pandemic
    21 Jul 2020Working Paper Summaries

    Business Reopening Decisions and Demand Forecasts During the COVID-19 Pandemic

    by Dylan Balla-Elliott, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton
    Findings from a nationwide survey underscore the importance of demand projections and interdependencies among businesses for owners’ reopening decisions. Businesses expect the demand for their services will be greatly depressed for many months to come.
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    Author Abstract

    How quickly will American businesses reopen after COVID-19 lockdowns end? We use a nationwide survey of small businesses to measure firms’ expectations about their re-opening and future demand. A plurality of firms in our sample expect to reopen within days of the end of legal restrictions, but a sizable minority expect to delay their reopening. While health-related variables, such as COVID-19 case rates and physical proximity of workers, do explain the prevalence and expected duration of regulated lockdown, these variables have little or no correlation with post-lockdown reopening intentions. Instead, almost one half of closed or partially open businesses said that their reopening would depend on the reopening of related businesses, including customers and suppliers. Owners expect demand to be one-third lower than before the crisis through autumn. Firms with more pessimistic expectations about demand predict a later reopening. Using an instrumental variables strategy, we estimate the relationship between demand expectations and reopening. These estimates suggest that post-lockdown delays in reopening can be explained by low levels of expected demand.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: June 2020
    • HBS Working Paper Number: HBS Working Paper #20-132
    • Faculty Unit(s): Negotiation, Organizations & Markets; Entrepreneurial Management
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    Zoe B. Cullen
    Zoe B. Cullen
    Assistant Professor of Business Administration
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    Michael Luca
    Michael Luca
    Lee J. Styslinger III Associate Professor of Business Administration
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    Christopher T. Stanton
    Christopher T. Stanton
    Marvin Bower Associate Professor
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    • COVID-19
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