|
Archive@NYU >
Stern School of Business >
Economics Working Papers >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/29991
|
| Title: | Exploding Offers and Buy-Now Discounts |
| Authors: | Zhou, Jidong
Armstrong, Mark |
| Keywords: | Consumer search
oligopoly
price discrimination
high-pressure selling |
| Issue Date: | 14-Sep-2011 |
| Abstract: | A common sales tactic is for a seller to encourage a potential customer
to make her purchase decision quickly, before she can investigate rival
deals in the market. We consider a market with sequential consumer
search in which firms can achieve this either by making an exploding
offer (which permits no return once the consumer leaves) or by offering
a buy-now discount (which makes the price paid for immediate purchase
lower than the regular price). We show that firms often have an
incentive to use these sales techniques, regardless of their ability to
commit to their selling policy. We examine the impact of these sales
techniques on market performance. Inducing consumers to buy quickly not
only reduces the quality of the match between consumers and products,
but may also raise market prices. |
| URI: | http://hdl.handle.net/2451/29991 |
| Appears in Collections: | Economics Working Papers
|
All items in Faculty Digital Archive are protected by copyright, with all rights reserved.
|
