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A model of add-on pricing

Author: Glenn Ellison; National Bureau of Economic Research.
Publisher: Cambridge, MA : National Bureau of Economic Research, ©2003.
Series: Working paper series (National Bureau of Economic Research), no. 9721.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
Abstract: This paper examines a competitive model of add-on pricing, the practice of advertising low prices for one good in hopes of selling additional products (or a higher quality product) to consumers at a high price at the point of sale. The main conclusion is that add-on pricing softens price competition between firms and results in higher equilibrium profits.
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Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Glenn Ellison; National Bureau of Economic Research.
OCLC Number: 52988817
Notes: "May 2003."
Description: 1 online resource (43 pages).
Series Title: Working paper series (National Bureau of Economic Research), no. 9721.
Responsibility: Glenn Ellison.

Abstract:

Abstract: This paper examines a competitive model of add-on pricing, the practice of advertising low prices for one good in hopes of selling additional products (or a higher quality product) to consumers at a high price at the point of sale. The main conclusion is that add-on pricing softens price competition between firms and results in higher equilibrium profits.

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