A Generalized Model of Advertised Sales

Sandro Shelegia and Christopher Wilson

No 14113, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: To better understand temporary price reductions or ‘sales’, this paper presents a generalized ‘clearinghouse’ framework of advertised sales and explores some example applications. By viewing the ï¬ rms as competing in utility and amending the conventional tie-break rule, we allow for multiple dimensions of ï¬ rm heterogeneity in complex market environments. Moreover, we i) provide original insights into the number and types of ï¬ rms that use sales, ii) offer new results on how ï¬ rm heterogeneity affects market outcomes, iii) extend a common empirical ‘cleaning’ procedure, and iv) analyze a family of activities in sales markets, including persuasive advertising and obfuscation.

Keywords: Sales; Price dispersion; Advertising; Clearinghouse; Heterogeneity (search for similar items in EconPapers)
JEL-codes: D43 L13 M3 (search for similar items in EconPapers)
Date: 2019-11
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Journal Article: A Generalized Model of Advertised Sales (2021)
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