IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v18y2009i5p607-618.html
   My bibliography  Save this article

You save money when you buy in bulk: does volume‐based pricing cause people to buy more beer?

Author

Listed:
  • Jeremy W. Bray
  • Brett R. Loomis
  • Mark Engelen

Abstract

This paper uses supermarket scanner data to estimate brand‐ and packaging‐specific own‐ and cross‐price elasticities for beer. We find that brand‐ and packaging‐specific beer sales are highly price elastic. Cross‐price elasticity estimates suggest that individuals are more likely to buy a higher‐volume package of the same brand of beer than they are to switch brands. Policy simulations suggest that regulation of volume‐based price discounts is potentially more effective than a tax increase at reducing beer consumption. Our results suggest that volume‐based price discounting induces people to buy larger‐volume packages of beer and may lead to an increased overall beer consumption. Copyright © 2008 John Wiley & Sons, Ltd.

Suggested Citation

  • Jeremy W. Bray & Brett R. Loomis & Mark Engelen, 2009. "You save money when you buy in bulk: does volume‐based pricing cause people to buy more beer?," Health Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 607-618, May.
  • Handle: RePEc:wly:hlthec:v:18:y:2009:i:5:p:607-618
    DOI: 10.1002/hec.1403
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.1403
    Download Restriction: no

    File URL: https://libkey.io/10.1002/hec.1403?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Manning, Willard G., 1998. "The logged dependent variable, heteroscedasticity, and the retransformation problem," Journal of Health Economics, Elsevier, vol. 17(3), pages 283-295, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Brian Dillon & Joachim De Weerdt & Ted O’Donoghue, 2021. "Paying More for Less: Why Don’t Households in Tanzania Take Advantage of Bulk Discounts?," The World Bank Economic Review, World Bank, vol. 35(1), pages 148-179.
    2. Xiaonan Liu & Jeffrey T. LaFrance & Hayley H. Chouinard & Thomas L. Marsh, 2013. "A Generalized Utility Model with Binding Non-Negativity Constraints: Demand for Beer," 2013 Papers pli830, Job Market Papers.
    3. Ruhm, Christopher J. & Jones, Alison Snow & McGeary, Kerry Anne & Kerr, William C. & Terza, Joseph V. & Greenfield, Thomas K. & Pandian, Ravi S., 2012. "What U.S. data should be used to measure the price elasticity of demand for alcohol?," Journal of Health Economics, Elsevier, vol. 31(6), pages 851-862.
    4. Daniel Toro-Gonzalez & Jia Yan & R. Karina Gallardo & Jill J. McCluskey, 2013. "Estimation of Unobserved Attributes Using a Control Function Approach, Modeling the Demand for Mint Flavored Gum," Working Papers 2013-06, School of Economic Sciences, Washington State University.
    5. Toro-Gonzalez, Daniel & McCluskey, Jill J. & Mittelhammer, Ron, 2014. "Beer Snobs Do Exist: Estimation of Beer Demand by Type," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(2), pages 1-14.
    6. Trey Malone & Jayson L. Lusk, 2019. "Releasing The Trap: A Method To Reduce Inattention Bias In Survey Data With Application To U.S. Beer Taxes," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 584-599, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Patrick Richard & Regine Walker & Pierre Alexandre, 2018. "The burden of out of pocket costs and medical debt faced by households with chronic health conditions in the United States," PLOS ONE, Public Library of Science, vol. 13(6), pages 1-13, June.
    2. Mullahy, John, 1998. "Much ado about two: reconsidering retransformation and the two-part model in health econometrics," Journal of Health Economics, Elsevier, vol. 17(3), pages 247-281, June.
    3. Trottmann, Maria & Zweifel, Peter & Beck, Konstantin, 2012. "Supply-side and demand-side cost sharing in deregulated social health insurance: Which is more effective?," Journal of Health Economics, Elsevier, vol. 31(1), pages 231-242.
    4. Buntin, Melinda Beeuwkes & Zaslavsky, Alan M., 2004. "Too much ado about two-part models and transformation?: Comparing methods of modeling Medicare expenditures," Journal of Health Economics, Elsevier, vol. 23(3), pages 525-542, May.
    5. Monica Oliveira, 2004. "Modelling demand and supply influences on utilization: A flow demand model to predict hospital utilization at the small area level," Applied Economics, Taylor & Francis Journals, vol. 36(20), pages 2237-2251.
    6. Jan Ondrich & J. David Richardson & Shuo Zhang, 2006. "A further investigation of the link between trade and income," International Economic Journal, Taylor & Francis Journals, vol. 20(1), pages 19-36.
    7. Michael A. Clemens & Claudio Montenegro & Lant Pritchett, 2016. "Bounding the Price Equivalent of Migration Barriers," CID Working Papers 316, Center for International Development at Harvard University.
    8. Daisuke Goto & Ya-Chen Tina Shih & Pascal Lecomte & Melvin Olson & Chukwukadibia Udeze & Yujin Park & C. Daniel Mullins, 2017. "Regression-Based Approaches to Patient-Centered Cost-Effectiveness Analysis," PharmacoEconomics, Springer, vol. 35(7), pages 685-695, July.
    9. Kosteas, Vasilios D. & Renna, Francesco, 2014. "Plan choice, health insurance cost and premium sharing," Journal of Health Economics, Elsevier, vol. 35(C), pages 179-188.
    10. Farrell, Susan & Manning, Willard G. & Finch, Michael D., 2003. "Alcohol dependence and the price of alcoholic beverages," Journal of Health Economics, Elsevier, vol. 22(1), pages 117-147, January.
    11. Richard B. Smith, 2005. "An Alternative Perspective On Information Asymmetry; Implications For Consumer Authority In Physician Services Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 665-699, September.
    12. Kristensen, Troels & Olsen, Kim Rose & Kilsmark, Jannie & Lauridsen, Jørgen T. & Pedersen, Kjeld Møller, 2012. "Economies of scale and scope in the Danish hospital sector prior to radical restructuring plans," Health Policy, Elsevier, vol. 106(2), pages 120-126.
    13. Keith Davis & Timothy Bell & Jacqueline Miller & Derek Misurski & Bela Bapat, 2011. "Hospital costs, length of stay and mortality associated with childhood, adolescent and young Adult meningococcal disease in the US," Applied Health Economics and Health Policy, Springer, vol. 9(3), pages 197-207, May.
    14. Matthew J. Gurka & Lloyd J. Edwards & Keith E. Muller & Lawrence L. Kupper, 2006. "Extending the Box-Cox transformation to the linear mixed model," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(2), pages 273-288.
    15. repec:mpr:mprres:3151 is not listed on IDEAS
    16. Kathleen Carey & Theodore Stefos, 2011. "Measuring the cost of hospital adverse patient safety events," Health Economics, John Wiley & Sons, Ltd., vol. 20(12), pages 1417-1430, December.
    17. Lai, Mun Sim & Orsuwan, Meechai, 2009. "Examining the Impact of Taiwan's Cash Allowance Program on Private Households," World Development, Elsevier, vol. 37(7), pages 1250-1260, July.
    18. Keeler, Theodore E. & Hu, Teh-wei & Manning, Willard G. & Sung, Hai-Yen, 2001. "State Tobacco Taxation, Education and Smoking: Controlling for the Effects of Omitted Variables," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 83-102, March.
    19. Jones, A.M, 2010. "Models For Health Care," Health, Econometrics and Data Group (HEDG) Working Papers 10/01, HEDG, c/o Department of Economics, University of York.
    20. Jenjira Yahirun & Dana Hamplová, 2014. "Children’s union status and contact with mothers: A cross-national study," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 30(51), pages 1413-1444.
    21. Barry T. Hirsch & Edward J. Schumacher, 2012. "Underpaid or Overpaid? Wage Analysis for Nurses Using Job and Worker Attributes," Southern Economic Journal, John Wiley & Sons, vol. 78(4), pages 1096-1119, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:18:y:2009:i:5:p:607-618. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.