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Strategic Obfuscation and Retail Pricing

Céline Bonnet, Zohra Mechemache (), Gordon Klein () and Timothy J. Richards

No 16-733, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: Retailers often stock items that are only slightly differentiated from others??differ- ent sizes of a popular brand, or different ?avors in a common product line for instance. We argue that this practice is a form of strategic obfuscation, intended to raise con- sumer search costs, and margins on non-comparable products. We test our hypothesis using examples from several product categories in German and French retail scanner data. We ?nd that, after controlling for other explanations for how margins can vary with package size, we cannot rule out strategic obfuscation as a feature of our retail sales data.

Keywords: differentiation; price discrimination; retail pricing; search model; strategic obfuscation (search for similar items in EconPapers)
JEL-codes: D43 L13 M31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-com and nep-mkt
Date: 2016-11
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