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

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Jeremy W. Bray, Professor and Department Head (Creator)
Institution
The University of North Carolina at Greensboro (UNCG )
Web Site: http://library.uncg.edu/

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.

Additional Information

Publication
Health Economics
Language: English
Date: 2009
Keywords
alcohol, price elasticity, brand substitution

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