You save money when you buy in bulk: does volume-based pricing cause people to buy more beer?
✍ Scribed by Jeremy W. Bray; Brett R. Loomis; Mark Engelen
- Publisher
- John Wiley and Sons
- Year
- 2009
- Tongue
- English
- Weight
- 437 KB
- Volume
- 18
- Category
- Article
- ISSN
- 1057-9230
- DOI
- 10.1002/hec.1403
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✦ Synopsis
Abstract
This paper uses supermarket scanner data to estimate brand‐ and packaging‐specific own‐ and cross‐price elasticities for beer. We find that brand‐ and packaging‐specific beer sales are highly price elastic. Cross‐price elasticity estimates suggest that individuals are more likely to buy a higher‐volume package of the same brand of beer than they are to switch brands. Policy simulations suggest that regulation of volume‐based price discounts is potentially more effective than a tax increase at reducing beer consumption. Our results suggest that volume‐based price discounting induces people to buy larger‐volume packages of beer and may lead to an increased overall beer consumption. Copyright © 2008 John Wiley & Sons, Ltd.