Pricing and Packaging: The Case of Marijuana
In many markets unit prices decline as the quantity purchased rises, a phenomenon which can be considered to be part of the economics of packaging. For example, in Australia marijuana costs as much as 80 percent less if purchased in the form of ounces rather than grams. This paper reviews the economic foundations of quantity discounts and proposes new ways of measuring and analysing them. These ideas are implemented with the prices of marijuana, a product that is shown to be priced in a manner not too different to that used for groceries and other illicit drugs. In broad terms, the results support the following pricing rule: The unit price falls by 2.5 percent when the product size increases by 10 percent.
|Date of creation:||2004|
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- Clements, Kenneth W & Izan, H Y, 1987. "The Measurement of Inflation: A Stochastic Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(3), pages 339-50, July.
- Clements, Kenneth W., 2003.
"Three Facts About Marijuana Prices,"
2003 Conference (47th), February 12-14, 2003, Fremantle, Australia
57846, Australian Agricultural and Resource Economics Society.
- Kenneth W. Clements, 2004. "Three facts about marijuana prices ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), pages 271-300, 06.
- Clements, Kenneth W., 2004. "Three facts about marijuana prices," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), June.
- Kenneth W. Clements, 2004. "Three Facts About Marijuana Prices," Economics Discussion / Working Papers 04-06, The University of Western Australia, Department of Economics.
- Kenneth W. Clements, 2002. "Three Facts About Marijuana Prices," Economics Discussion / Working Papers 02-10, The University of Western Australia, Department of Economics.
- Gerstner, Eitan & Hess, James D, 1987. "Why Do Hot Dogs Come in Packs of 10 and Buns in 8s or 12s? A Demand-Side Investigation," The Journal of Business, University of Chicago Press, vol. 60(4), pages 491-517, October.
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