Banning volume discounts to curb excessive consumption: A cautionary tale

Farasat Bokhari, Paul W. Dobson, Marcello Morciano and Marc Suhrcke

European Economic Review, 2023, vol. 156, issue C

Abstract: Volume discounts encourage consumers to buy more. Banning such discounts should then lead to consumers buying less. This is the thinking behind banning multiple-unit discounts, including multibuy price promotions, to curb excessive harmful consumption of alcohol and high-fat, -sugar, and -salt (HFSS) foods. However, our analysis questions the validity of this thinking, which ignores the possible restraining effect of volume discounts. We find that such a ban for retailing alcohol in Scotland increased rather than reduced sales. Retailers switched to using more straight (single-unit) discounts, which encouraged high-consumption households to increase their shopping frequency and buy more.

Keywords: Volume discounts; Excessive consumption; Multibuy; Alcohol (search for similar items in EconPapers)
JEL-codes: C54 D04 H23 I12 I18 L81 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Banning Volume Discounts to Curb Excessive Consumption: A Cautionary Tale (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:156:y:2023:i:c:s0014292123001095

DOI: 10.1016/j.euroecorev.2023.104480

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