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You save money when you buy in bulk: does volume-based pricing cause people to buy more beer?

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Author Info
Jeremy W. Bray (RTI International, Research Triangle Park, NC, USA)
Brett R. Loomis (RTI International, Research Triangle Park, NC, USA)
Mark Engelen (RTI International, Research Triangle Park, NC, USA)
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.

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File URL: http://hdl.handle.net/10.1002/hec.1403
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 18 (2009)
Issue (Month): 5 ()
Pages: 607-618
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:18:y:2009:i:5:p:607-618

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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This page was last updated on 2009-12-30.

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