Unplanned Purchases and Retail Competition

• 成果类型: Article
• 署名作者: Johnson, Justin P.
• 署名单位: Cornell University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20140605
• 发表日期: 2017
• 页码: 931-965
• 关键词: self-control; LOSS-LEADER; consumers; BEHAVIOR; MODEL

摘要

I propose a framework in which asymmetric multiproduct retailers compete for one-stop shoppers who have biased beliefs about their future purchase probabilities (and so make unplanned purchases). One firm carries a full portfolio of products while the other carries an incomplete but endogenous one. Using this framework, I examine the phenomenon of loss leading, the optimal product portfolio of the smaller firm, and the effects of banning loss leading. Among other results, I show that there is a nonpredatory (and possibly procompetitive) justification for the observation that such larger firms may charge below cost on the core product lines of their smaller rivals.