Sales, Quantity Surcharge, and Consumer Inattention

Pascal Courty and Sofronis Clerides

No 8115, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Quantity surcharges occur when firms market a product in two sizes and offer a promotion on the small size: the large size then costs more per unit than the small one. When quantity surcharges occur the sales of the large size decrease only slightly despite the fact that the small size is a cheaper option - a clear arbitrage opportunity. This behavior is consistent with the notion of rationally inattentive consumers that has been developed in models of information frictions. We discuss implications for consumer decision making, demand estimation, and firm pricing.

Keywords: Consumer inattention; Nonlinear pricing; Promotions; Quantity discounts; Quantity surcharge; Sales (search for similar items in EconPapers)
JEL-codes: D4 L12 L13 (search for similar items in EconPapers)
Date: 2010-11
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Sales, Quantity Surcharge, and Consumer Inattention (2017)
Working Paper: Sales, Quantity Surcharge, and Consumer Inattention (2010)
Working Paper: Sales, Quantity Surcharge, and Consumer Inattention (2010)
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