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Banning volume discounts to curb excessive consumption: A cautionary tale

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posted on 2025-02-26, 11:37 authored by Farasat BokhariFarasat Bokhari, PW Dobson, M Morciano, M Suhrcke
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.

History

School

  • Loughborough Business School

Published in

European Economic Review

Volume

156

Publisher

Elsevier B.V

Version

  • VoR (Version of Record)

Rights holder

© The Author(s)

Publisher statement

This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/)

Acceptance date

2023-05-07

Publication date

2023-05-20

Copyright date

2023

ISSN

0014-2921

Language

  • en

Depositor

Prof Farasat Bokhari. Deposit date: 4 August 2024

Article number

104480

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