Effect of Price-Discount Distribution in Multi-Unit Price Promotions on Sales Value and retailers’ revenue: Evidence from Multi-Unit Auctions
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Using multi-unit auctions, we examined the effect of different distributions of price discount across multiple units of a relatively new product on consumers’ Willingness to Pay (WTP), sales value and retailers’ revenue. We found that allowing the price discount to be increasing in the number of units largely increases willingness to pay, sales value and retailers’ revenue and that a price discount that is uniformly distributed across units also has the potential to motivate consumers to buy more units of the new product. However, multi-unit price promotions that concentrate all the amount of price discount on the last unit only provides a weak positive effect on sales value.