Why Suggest Non-Binding Retail Prices
Why Suggest Non-Binding Retail Prices
Bibliographic Data
| ID | 9728024 |
|---|---|
| Authors | Clemens Puppe (0000-0002-2110-1017, Karlsruhe University of Education), Stephanie Rosenkranz (0000-0002-5931-7913, Utrecht University) |
| Year | 2011 |
| Volume | 78 |
| Issue | 310 |
| Pages | 317-329 |
| Publication date | 2011-04-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/j.1468-0335.2009.00827.x |
| OpenAlex | W2146612936 |
| Language | EN |
| Citations received | 2 |
| References cited | 12 |
We provide a simple behavioural explanation of why manufacturers frequently announce non-binding suggested retail prices for their products. Our model is based on the assumption that once the actual price for a product exceeds its suggested retail price, the marginal propensity to consume suddenly jumps downward. We show that this may induce a monopolistic retailer to set the price equal to the suggested retail price in equilibrium, although the latter price is non-binding. This, in turn, leads to a shift of profits from the retailer to the manufacturer
Economics · Microeconomics · Monopolistic competition · Monopoly · Product (mathematics) · Consumer Market Behavior and Pricing · Decision-Making and Behavioral Economics · Economic theories and models · Mathematics
| Unique citing works | 2 |
|---|---|
| Citations per year | 0,2 |
| Citation span | 2016 - 2018 (3) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 2 |