Why Do Hot Dogs Come in Packs of 10 and Buns in 8s or 12s? A Demand-Side Investigation
AbstractThis paper presents a theory that yields insight into the determination of package prices and sizes. Consumer heterogeneity in consumption rates, storage costs, and transactions costs (costs of making trips to the store) explains differences in package sizes and unit prices. In the model, fully-informed consumers and a monopolist seller pursue optimizing behavior. The seller chooses package sizes and prices to maximize profits, and the consumers select package sizes that maximize their utilities. The authors show that consumer heterogeneity may induce the seller to offer more than one size and that larger sizes would be sold either at unit-price discounts or unit-price premiums. Welfare implications and empirical tests of the theory are presented. Copyright 1987 by the University of Chicago.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 60 (1987)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JB/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Agrawal, Jagdish & Grimm, Pamela E. & Srinivasan, Narasimhan, 1994. "Quantity Surcharges on Groceries," Research Reports 25179, University of Connecticut, Food Marketing Policy Center.
- Kokovin, Sergey & Nahata, Babu & Zhelobodko, Evgeny, 2008. "Why quantity premia are rare?," Economics Letters, Elsevier, vol. 100(1), pages 153-156, July.
- Cohen, Andrew, 2008. "Package size and price discrimination in the paper towel market," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 502-516, March.
- Kokovin Sergey & Zhelobodko Evgeniy, 2008. "Diagnosing Efficiency of Distortion in Discrete Screening," EERC Working Paper Series 08/02e, EERC Research Network, Russia and CIS.
- Kenneth W. Clements, 2004.
"Pricing and Packaging: The Case of Marijuana,"
Economics Discussion / Working Papers
04-03, The University of Western Australia, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.