TY - JOUR
T1 - Banning volume discounts to curb excessive consumption: A cautionary tale
AU - Bokhari, Farasat A.S.
AU - Dobson, Paul W.
AU - Morciano, Marcello
AU - Suhrcke, Marc
N1 - Funding Information:
We wish to thank the editorial team and reviewers for their suggestions and guidance. In addition, we thank Rachel Griffith, Josh Kraindler, Eugenio Miravete, Katja Seim, and seminar participants at the Center for Competition Policy and the Health Economics Study Group UK (2019) for their helpful comments and feedback. MS is a former member of the Policy Research Unit in Behaviour and Health at the University of Cambridge which was funded by the Department of Health Policy Research Programme (PR-UN-0409-10109). We are very grateful to its director, Professor Theresa Marteau, for allowing us to use the data and to the authors of Nakamura et al. (2014) for making the data available to us. Neither the funders nor the data providers bear any responsibility for the analyses or interpretations presented here.
Funding Information:
We wish to thank the editorial team and reviewers for their suggestions and guidance. In addition, we thank Rachel Griffith, Josh Kraindler, Eugenio Miravete, Katja Seim, and seminar participants at the Center for Competition Policy and the Health Economics Study Group UK (2019) for their helpful comments and feedback. MS is a former member of the Policy Research Unit in Behaviour and Health at the University of Cambridge which was funded by the Department of Health Policy Research Programme (PR-UN-0409-10109). We are very grateful to its director, Professor Theresa Marteau, for allowing us to use the data and to the authors of Nakamura et al. (2014) for making the data available to us. Neither the funders nor the data providers bear any responsibility for the analyses or interpretations presented here.
Publisher Copyright:
© 2023 The Author(s)
PY - 2023/7
Y1 - 2023/7
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.
KW - Volume discounts
KW - Excessive consumption
KW - Multibuy
KW - Alcohol
UR - http://www.scopus.com/inward/record.url?scp=85160765302&partnerID=8YFLogxK
UR - https://www.mendeley.com/catalogue/8675d0c2-adcd-3b42-a224-5a9879012d80/
U2 - 10.1016/j.euroecorev.2023.104480
DO - 10.1016/j.euroecorev.2023.104480
M3 - Article
SN - 0014-2921
VL - 156
JO - European Economic Review
JF - European Economic Review
M1 - 104480
ER -