Essays on Quantity Surcharges and Consumer Heterogeneity

Download or read book Essays on Quantity Surcharges and Consumer Heterogeneity written by Hyewon Kim and published by . This book was released on 2018 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation examines quantity surcharges and heterogeneity in consumer attention. Quantity surcharges exist for packaged goods when a smaller package size is cheaper than its larger size counterpart per unit. Even though consumers face quantity surcharges in their daily lives, minimal research has been done on this topic. Chapter 1 documents the relevance of quantity surcharges for households who shop at grocery stores. I use rich scanner data in the peanut butter category for this analysis and throughout the other chapters. The data show that quantity surcharges are highly frequent: they exist in 62\% of weeks. Quantity surcharges also exist consistently over time, rather than being a side effect of occasional sales on small size items. Households have heterogeneous purchasing behavior during quantity surcharge periods: some households take advantage of the surcharge and purchase multiple small size jars, but others pay extra and buy large jars ("miss" purchases). I analyze the characteristics of those households who make miss purchases using negative binomial regressions, and find that they have large expenditures per shopping trip and small variety of peanut butter purchases.