You save money when you buy in bulk: does volume-based pricing cause people to buy more beer?
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.
Bray
Jeremy W
JW
RTI International, Research Triangle Park, NC 27709, USA. bray@rti.org
Loomis
Brett R
BR
Engelen
Mark
M
D001515:Beer / Q000191:economics* / Q000600:supply & distribution; D003132:Commerce / Q000191:economics*; D007182:Income; D017059:Models, Econometric; D009042:Motivation; D019064:Product Packaging / Q000191:economics; D014481:United States