TY - JOUR
T1 - Banning volume discounts to curb excessive consumption: A cautionary tale
AU - Bokhari, Farasat
AU - Dobson, Paul
AU - Morciano, Marcello
AU - Suhrcke, Marc
PY - 2023/5/20
Y1 - 2023/5/20
N2 - Volume discounts encourage consumers to buy more. Banning such discounts should then lead to consumers buying less. This is the thinking behind banning multiple-unit discounts, including multibuy price promotions, to curb excessive harmful consumption of alcohol and high-fat, -sugar, and -salt (HFSS) foods. However, our analysis questions the validity of this thinking, which ignores the possible restraining effect of volume discounts. We find that such a ban for retailing alcohol in Scotland increased rather than reduced sales. Retailers switched to using more straight (single-unit) discounts, which encouraged high-consumption households to increase their shopping frequency and buy more.
AB - Volume discounts encourage consumers to buy more. Banning such discounts should then lead to consumers buying less. This is the thinking behind banning multiple-unit discounts, including multibuy price promotions, to curb excessive harmful consumption of alcohol and high-fat, -sugar, and -salt (HFSS) foods. However, our analysis questions the validity of this thinking, which ignores the possible restraining effect of volume discounts. We find that such a ban for retailing alcohol in Scotland increased rather than reduced sales. Retailers switched to using more straight (single-unit) discounts, which encouraged high-consumption households to increase their shopping frequency and buy more.
U2 - 10.1016/j.euroecorev.2023.104480
DO - 10.1016/j.euroecorev.2023.104480
M3 - Article
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
M1 - 104480
ER -