← Search

Sales, Quantity Surcharge, and Consumer Inattention

Sofronis Clerides1; Pascal Courty2,3

1 University of Cyprus · 2 Center for Economic and Policy Research · 3 University of Victoria

The Review of Economics and Statistics 2017

Quantity surcharges occur when retailers carry 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, sales of the large size decline only slightly even though the same quantity can be purchased for less. We document this behavior in two data sets and four product categories. It is consistent with the notion of passive shoppers found in the industrial organization literature and the notion of rational inattention in macroeconomics. We discuss implications for consumer decision making, demand estimation, and firm pricing.

DOI
10.1162/rest_a_00562
Volume
99 (2)
Pages
357-370
Language
en
Export
BibTeX
Sources
openalex crossref