Fake Sales: A Dynamic Pricing Perspective

Daniel Garrett

No 19-1037, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Some sellers display high "regular" prices, but mark down these prices the vast majority of the time, advertising the good as "on sale" or "discounted". This note suggests a framework for understanding the practice, emphasizing the role of buyer uncertainty about their future valuations for the good. We argue that so-called "regular" prices set buyers' expectations regarding future prices, expectations that need not be tethered to the prices actually set. By manipulating upwards buyers' expectations of future prices, the seller can increase demand for the good at the current "sale" price, increasing profits

Keywords: fake sales; dynamic pricing; value uncertainty (search for similar items in EconPapers)
JEL-codes: D82 L12 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-com, nep-mic and nep-reg
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Journal Article: Fake Sales: A Dynamic Pricing Perspective (2019)
Journal Article: Fake Sales: A Dynamic Pricing Perspective (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:123494

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