ADD-ON PRICING OVER REGIONAL BUSINESS CYCLES: EVIDENCE FROM EXTENDED WARRANTIES

• 成果类型: Article
• 署名作者: Boskovic, Branko; Kapoor, Sacha; Markiewicz, Agnieszka; Scholnick, Barry
• 署名单位: Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC; Tinbergen Institute; University of Alberta; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12710
• 发表日期: 2024
• 页码: 2019-2046
• 关键词: prices; sales; cyclicality; time

摘要

Add ons are features or services that can enhance the functionality or quality of base goods. They are pervasive. Yet we know little about the behavior of add-on prices over the business cycle. We use 10 years of data from a nationwide Canadian retailer to investigate the local cyclicality of extended warranty prices, a classic add on. We find base prices are acyclical. Warranty prices are procyclical because local stores use warranties to make demand for durable goods less price-elastic. We show add ons amplify responses to national business cycles and study the implications for inflation rate bias.