ALL TUNA IS NOT CREATED EQUAL: THE EXISTENCE OF QUANTITY SURCHARGES DUE TO PRODUCT DIFFERENTIATION.
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Quantity surcharges exist when unit prices are higher for larger packages. We hypothesize that various sizes of goods are differentiated products, and this explains some surcharges. Estimating a random-coefficients logit demand model, we examine own and cross elasticities to determine the level of differentiation between products with different size packages.