Sales, Quantity Surcharge, and Consumer Inattention

Sofronis Clerides and Pascal Courty

University of Cyprus Working Papers in Economics from University of Cyprus Department of Economics

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)
Pages: 31 pages
Date: 2010-11
New Economics Papers: this item is included in nep-com and nep-mkt
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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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Persistent link: https://EconPapers.repec.org/RePEc:ucy:cypeua:07-2010

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