You save money when you buy in bulk: does volume-based pricing cause people to buy more beer?
Article first published online: 3 SEP 2008
Copyright © 2008 John Wiley & Sons, Ltd.
Volume 18, Issue 5, pages 607–618, May 2009
How to Cite
Bray, J. W., Loomis, B. R. and Engelen, M. (2009), You save money when you buy in bulk: does volume-based pricing cause people to buy more beer?. Health Econ., 18: 607–618. doi: 10.1002/hec.1403
- Issue published online: 15 APR 2009
- Article first published online: 3 SEP 2008
- Manuscript Accepted: 17 JUN 2008
- Manuscript Revised: 23 MAY 2008
- Manuscript Received: 14 AUG 2006
- price elasticity;
- brand substitution
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.