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Empirical Analysis of Price Setting and Quantity Surcharges in the German Food Sector

Silke Schmitz and Awudu Abdulai

No 21419, 2006 Annual meeting, July 23-26, Long Beach, CA from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study examined the incidence and determinants of quantity price discounts and quantity price surcharges in the German food sector through a bivariate probit, using recent consumer scanner survey data. Selectivity bias was corrected for in estimating the degree of quantity price surcharge and quantity price discount, using Heckman’'s procedure. The findings reveal that almost 10% of the investigated products attract higher unit prices for larger package sizes, although the extent of price surcharges varied among product categories. The number of package sizes, the average package size, packaging form, storage form, as well as the price image of a product, were found to be significantly related to the probability and degree of quantity price surcharges and quantity price discounts.

Keywords: Consumer/Household Economics (search for similar items in EconPapers)
Date: 2006
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