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The Economics Of Nonlinear Pricing: Evidence From Airfares And Grocery Prices

Author

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  • Allan R L Poon

    (UWA Business School, The University of Western Australia)

Abstract

Quantity discounts, characterised by unit prices falling as the quantity purchased rises, are a proliferate phenomenon that finds root in the economics of packaging. This paper reviews the key economic foundations of nonlinear pricing, introduces new pricing data and conducts an empirical investigation into airfares and grocery prices, which are shown to exhibit quantity discounts of an identical order of magnitude. The constancy of the quantity discount across distinct markets hints at the existence of a common force underlying the determination of prices.

Suggested Citation

  • Allan R L Poon, 2010. "The Economics Of Nonlinear Pricing: Evidence From Airfares And Grocery Prices," Economics Discussion / Working Papers 10-23, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:10-23
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    File URL: https://www.business.uwa.edu.au/__data/assets/rtf_file/0003/1326126/10-23_The_Economics_of_Nonlinear_Pricing.pdf
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    Cited by:

    1. Susan E Pen, 2012. "Quality-Constant Illicit Drug Prices," Economics Discussion / Working Papers 12-22, The University of Western Australia, Department of Economics.

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