Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g

B Peter Pashigian

American Economic Review, 1988, vol. 78, issue 5, 936-53

Abstract: The theory of clearance sales is expanded and applied to explain why markups, markdowns, and the frequency of sales of merchandise sold by department stores have increased dramatically in recent years and why they differ across merchandise groups. Tha major theme of the paper is that the growing role of fashion and product variety is an important reason for these increases and for the differences between merchandise groups. The growing importance of fashion is illustrated by documenting the declining use of whites and the increasing use of colors and prints. Estimates of the effects of imports, and technological and demographic changes on markups and markdowns, are presented. Copyright 1988 by American Economic Association.

Date: 1988
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