Discount Pricing
Mark Armstrong and
Yongmin Chen
MPRA Paper from University Library of Munich, Germany
Abstract:
We investigate the marketing practice of framing a price as a discount from an earlier price. We discuss two reasons why a discounted price---rather than a merely low price---can make a rational consumer more willing to purchase. First, a high initial price can indicate the seller has chosen to supply a high-quality product. Second, a seller with limited stock runs a clearance sale, later consumers infer that an unsold product may be poor quality, but if the initial price was higher they do not downgrade their evaluation of quality as much. In either case, if able to do so a seller has an incentive to engage in fictitious pricing, where the reported initial price is exaggerated.
Keywords: Reference dependence; sales tactics; false advertising; fictitious pricing; consumer protection (search for similar items in EconPapers)
JEL-codes: D42 D83 L15 M31 M37 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-com, nep-mic, nep-mkt and nep-upt
References: Add references at CitEc
Citations:
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/76681/1/MPRA_paper_76681.pdf original version (application/pdf)
Related works:
Journal Article: DISCOUNT PRICING (2020)
Working Paper: Discount Pricing (2013)
Working Paper: Discount Pricing (2012)
Working Paper: Discount pricing (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:76681
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter (winter@lmu.de).