Skip to main content
Article
Sales, Quantity Surcharge, and Consumer Inattention
Review of Economics and Statistics (2017)
  • Sofronis Clerides, University of Cyprus
  • Pascal Courty, University of Victoria
Abstract
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.
Keywords
  • quantity surcharge,
  • sales,
  • promotions,
  • consumer inattention,
  • quantity discounts,
  • nonlinear pricing
Publication Date
May, 2017
DOI
10.1162/REST_a_00562
Citation Information
Sofronis Clerides and Pascal Courty. "Sales, Quantity Surcharge, and Consumer Inattention" Review of Economics and Statistics Vol. 99 Iss. 2 (2017) p. 357 - 370
Available at: http://works.bepress.com/sofronis_clerides/14/