Banning volume discounts to curb excessive consumption: A cautionary tale

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Abstract

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.
Original languageEnglish
Article number104480
JournalEuropean Economic Review
Volume156
Early online date20 May 2023
DOIs
Publication statusPublished - Jul 2023

Keywords

  • Alcohol
  • Excessive consumption
  • Multibuy
  • Volume discounts

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