We implement a simple two-shop search model in the laboratory with the aim to investigate if consumers behave differently in equivalent situations, where prices are displayed either as net prices or as gross prices with discounts . We compare treatments, where we either depict the known price of the first shop or the initially uncertain price of the second shop as a gross price with a discount,...

EXECUTIVE SUMMARY: In a recent article in this journal, Scott (2014) documented the social welfare rationale for offering discounts to the economically disadvantaged. However, he acknowledged the conventional view is that discounts equate to reduced revenue and more tax support which makes them difficult to sustain in many communities. The goal of this paper is to offer an alternative justifica...

This paper uses laboratory methods to evaluate whether price-fixing conspiracies break down in the presence of opportunities to offer secret discounts. The primary treatment difference is whether or not buyer-specific discounts from the posted list price are permitted. In standard posted-offer markets, conspiring sellers are able to find and maintain near-monopoly prices. But when the possibili...

for any organization sound marketing strategy and quality assurance play vital role in the growth of the organization. the price, quality and service, service centers, friendly attitude, discounts on sales, esthetics, store location and appearance, ease of operations, guarantees and warranties, adopting new ideas, and flexible payments terms were considered to study the perceptions of the respo...

The Postal Accountability and Enhancement Act of 2006 (PAEA) fundamentally altered the U.S. Postal Service by introducing enhanced pricing flexibility, profit incentives, and potential antitrust liability. PAEA also mandated a change from breakeven, cost-of-service regulation where revenues must equal costs over time to price cap regulation. The Postal Service can now introduce new or modify ex...

OBJECTIVE The objective of this study was to provide an overview about the existence and types of discounts and rebates granted to public payers by the pharmaceutical industry in European countries. METHODS Data were collected via a questionnaire in spring 2011. Officials from public authorities for pharmaceutical pricing and reimbursement represented in the PPRI (Pharmaceutical Pricing and R...

This paper provides a new explanation of why price reductions take place on a regular basis. It is argued that the demand for a ...rm’s product drops over time because of the erosion of consumers’ brand recall, which in turn can be boosted by price cuts. After analyzing the dynamic optimal choice of price discounts in both monopoly and duopoly settings, I show that a monopolist’s optimal pricin...

The behavioral implications of relatively low prices and of discounts have been viewed from two opposing perspectives. From an attribution perspective, a large discount signals low quality and decreases the overall appeal of the product, but from a motivational account, a large discount seems attractive and increases the overall appeal of the product. We demonstrate the existence of both accoun...

The standard monopoly pricing problem is re-considered when the buyer can disclose his type (e.g. age, income, experience) at some cost. In the optimal sales mechanism with costly disclosure, the seller posts a price list, including a “sticker price” available to any buyer and a schedule of discounts available to those who disclose certain types. Unambiguous welfare implications of such a prici...