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Quantity surcharge, competition and package size: evidence from India

Author

Listed:
  • Dhruv Goel

    (Indian Institute of Management Ahmedabad)

  • Anushka Goyal

    (Delhi University)

  • Ishaan Sand

    (Indian Institute of Management Rohtak)

Abstract

We investigate the influence of market competition heterogeneity across package sizes on a firm’s pricing strategy. We focus on the transition from quantity discounts (common practice) to quantity surcharges (charging more for larger packages) and hypothesise that firms adopt surcharges when competition is significantly higher in the smaller-package market. Using a survey of 38 grocery stores, we find that the adoption of surcharges rises alongside substantial disparities in competition between sizes, as measured by brand availability. We posit that varying demand elasticities between pack sizes, driven by heterogeneous consumer preferences, may underpin this competition divergence and subsequent pricing strategy shifts. Our findings contribute to the understanding of pricing dynamics under asymmetric competition and offer insights for firms navigating competitive landscapes across product formats.

Suggested Citation

  • Dhruv Goel & Anushka Goyal & Ishaan Sand, 2024. "Quantity surcharge, competition and package size: evidence from India," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(5), pages 452-460, October.
    • Handle: RePEc:pal:jorapm:v:23:y:2024:i:5:d:10.1057_s41272-024-00482-w
    DOI: 10.1057/s41272-024-00482-w
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    References listed on IDEAS

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    Cited by:

    1. Ian Yeoman, 2024. "Using revenue management and pricing beyond the airline and hotel industries: an ever increasing pathway of success," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(5), pages 381-383, October.

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