search query: @author Hess, J. D. / total: 5
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| Author: | Gerstner, E. Hess, J. D. |
| Title: | Why do hot dogs come in packs of 10 and buns in 8s or 12s? A demand-side investigation |
| Journal: | Journal of Business
1987 : OCT, VOL. 60:4, p.491-517 |
| Index terms: | CONSUMPTION FOOD INDUSTRY |
| Language: | eng |
| Abstract: | The objective is to present a theory that gives insight into the determination of package prices and sizes and that captures some important stylized facts about package pricing. Consumer heterogeneity on consumption rates, storage costs, and transaction costs, i.e. costs of making trips to the store, result in a variety of package sizes at unit prices that may reflect quantity discounts or quantity premiums. The model studies fully informed consumers and a monopolist seller as they optimize behavior. The package sizes and unit prices that maximize the seller's profits must account for consumers' selection of the most attractive offer. The same heterogeneity that indices the seller to offer more than one size, also leads to discounts. |
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