Quantity Surcharges on Groceries

Jagdish Agrawal, Pamela E. Grimm and Narasimhan Srinivasan

No 24, Food Marketing Policy Center Research Reports from University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy

Abstract: A quantity surcharge exists when the unit cost of a given brand is higher for a large-size package than for a smaller one. This paper examines some product and household characteristics that influence observed quantity surcharging practices. Results indicate that the propensity to buy a large-size package of a product is positively influenced by the extent of a household's usage of that product, procurement cost, and carrying capacity, and is negatively influenced by the propensity to price search. A retailer's decision to levy a quantity surcharge is, in turn, influenced by the demand for the product, the propensity to buy large-size packages, and to some extent the product's carrying cost.

Keywords: Agribusiness; Demand and Price Analysis (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:zwi:fpcrep:024

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