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Strategic Obfuscation and Retail Pricing

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  • Bonnet, Céline
  • Bouamra-Mechemache, Zohra
  • Klein, Gordon
  • Richards, Timothy J.

Abstract

Retailers often stock items that are only slightly differentiated from others??differ- ent sizes of a popular brand, or different ?avors in a common product line for instance. We argue that this practice is a form of strategic obfuscation, intended to raise con- sumer search costs, and margins on non-comparable products. We test our hypothesis using examples from several product categories in German and French retail scanner data. We ?nd that, after controlling for other explanations for how margins can vary with package size, we cannot rule out strategic obfuscation as a feature of our retail sales data.

Suggested Citation

  • Bonnet, Céline & Bouamra-Mechemache, Zohra & Klein, Gordon & Richards, Timothy J., 2016. "Strategic Obfuscation and Retail Pricing," TSE Working Papers 16-733, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:31198
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    3. Richards, Timothy J. & Paudel, Ujjwol, 2024. "Minimum Wages and Pass-Through," 2024 Annual Meeting, July 28-30, New Orleans, LA 343648, Agricultural and Applied Economics Association.
    4. Edona Reshidi, 2022. "Vertical Bargaining and Obfuscation," Staff Working Papers 22-13, Bank of Canada.

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    More about this item

    Keywords

    differentiation; price discrimination; retail pricing; search model; strategic obfuscation;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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