Sales, quantity surcharge, and consumer inattention
Ημερομηνία
2017Source
Review of Economics and StatisticsVolume
99Pages
357-370Google Scholar check
Metadata
Εμφάνιση πλήρους εγγραφήςΕπιτομή
Quantity surcharges occur when retailers carry a product in two sizes and offer a promotion on the small size: the large size then costs more per unit than the small one. When quantity surcharges occur, sales of the large size decline only slightly even though the same quantity can be purchased for less. We document this behavior in two data sets and four product categories. It is consistent with the notion of passive shoppers found in the industrial organization literature and the notion of rational inattention in macroeconomics. We discuss implications for consumer decision making, demand estimation, and firm pricing. © 2017 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.