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


  • 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)


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.

Suggested Citation

  • Jeremy W. Bray & Brett R. Loomis & Mark Engelen, 2009. "You save money when you buy in bulk: does volume-based pricing cause people to buy more beer?," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 607-618.
  • Handle: RePEc:wly:hlthec:v:18:y:2009:i:5:p:607-618 DOI: 10.1002/hec.1403

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    References listed on IDEAS

    1. Manning, Willard G., 1998. "The logged dependent variable, heteroscedasticity, and the retransformation problem," Journal of Health Economics, Elsevier, vol. 17(3), pages 283-295, June.
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    Cited by:

    1. Xiaonan Liu & Jeffrey T. LaFrance & Hayley H. Chouinard & Thomas L. Marsh, 2013. "A Generalized Utility Model with Binding Non-Negativity Constraints: Demand for Beer," 2013 Papers pli830, Job Market Papers.
    2. Ruhm, Christopher J. & Jones, Alison Snow & McGeary, Kerry Anne & Kerr, William C. & Terza, Joseph V. & Greenfield, Thomas K. & Pandian, Ravi S., 2012. "What U.S. data should be used to measure the price elasticity of demand for alcohol?," Journal of Health Economics, Elsevier, vol. 31(6), pages 851-862.
    3. Daniel Toro-Gonzalez & Jia Yan & R. Karina Gallardo & Jill J. McCluskey, 2013. "Estimation of Unobserved Attributes Using a Control Function Approach, Modeling the Demand for Mint Flavored Gum," Working Papers 2013-06, School of Economic Sciences, Washington State University.
    4. Toro-Gonzalez, Daniel & McCluskey, Jill J. & Mittelhammer, Ron, 2014. "Beer Snobs Do Exist: Estimation of Beer Demand by Type," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), August.
    5. Brian Dillon & Joachim De Weerdt & Ted O’Donoghue, 2017. "Paying More For Less: Why Don't Households In Tanzania Take Advantage Of Bulk Discounts?," LICOS Discussion Papers 39617, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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