Banning Volume Discounts to Curb Excessive Consumption: A Cautionary Tale

Farasat Bokhari and Paul Dobson
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Paul Dobson: Centre for Competition Policy and Norwich Business School, University of East Anglia

No 2022-04, Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) from Centre for Competition Policy, University of East Anglia, Norwich, UK.

Abstract: Volume discounts encourage consumers to buy more. Banning such discounts should then lead to consumers buying less. This is the thinking behind banning multiple-unit discounts, including multibuy price promotions, to curb harmful excessive consumption of alcohol and high fat, sugar and salt (HFSS) foods. However, our analysis questions the validity of this thinking, which ignores the possible restraining effect of volume discounts. We found that such a ban for retailing alcohol in Scotland increased rather than reduced sales. Retailers switched to using more straight (single unit) discounts, which encouraged high consumption households to increase their shopping frequency and buy more.

Keywords: Volume discounts; excessive consumption; multibuy; alcohol (search for similar items in EconPapers)
Date: 2022-07-08
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Journal Article: Banning volume discounts to curb excessive consumption: A cautionary tale (2023)
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