Sales, Quantity Surcharge, and Consumer Inattention

Sofronis Clerides and Pascal Courty

Working Paper series from Rimini Centre for Economic Analysis

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: quantity surcharge; sales; promotions; consumer inattention; quantity discounts; nonlinear pricing (search for similar items in EconPapers)
JEL-codes: D4 L12 L13 (search for similar items in EconPapers)
Date: 2010-01
New Economics Papers: this item is included in nep-com, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.rcea.org/RePEc/pdf/wp32_10.pdf (application/pdf)

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)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rim:rimwps:32_10

Access Statistics for this paper

More papers in Working Paper series from Rimini Centre for Economic Analysis Contact information at EDIRC.
Bibliographic data for series maintained by Marco Savioli ().