Strategic Obfuscation and Retail Pricing

Consumer-product manufacturers—and retailers that sell their products—often sell slightly differentiated items for reasons other than appealing to heterogeneous tastes—different sizes of a popular brand, or different flavors in a common product line for instance. We argue that this practice is a form of strategic obfuscation, which is intended to make price-comparison more difficult, and thereby raise margins on non-comparable products. We test our hypothesis with the use of examples from consumer-packaged good categories in German and French retail scanner data. We find that—after controlling for other explanations for how margins can vary with package size and type—we cannot rule out strategic obfuscation as a feature of our retail sales data.