publication . Article . 2007

When do price thresholds matter in retail categories?

Koen Pauwels; Shuba Srinivasan; Philip Hans Franses;
Open Access English
  • Published: 01 Jan 2007
  • Country: Netherlands
textabstractMarketing literature has long recognized that brand price elasticity need not be monotonic and symmetric, but has yet to provide generalizable market-level insights on threshold-based price elasticity, asymmetric thresholds, and the sign and magnitude of elasticity transitions. This paper introduces smooth transition regression models to study threshold-based price elasticity of the top 4 brands across 20 fast-moving consumer good categories. Threshold-based price elasticity is found for 76% of all brands: 29% reflect historical benchmark prices, 16% reflect competitive benchmark prices, and 31% reflect both types of benchmarks. The authors demonstra...
free text keywords: kinked demand curve, smooth-transition regression models, time-series analysis, asymmetric price thresholds, empirical generalizations, Asymmetric price thresholds, Empirical generalizations, Kinked demand curve, Smooth-transition regression models, Time-series analysis, Price discrimination, Marketing, Limit price, Cross elasticity of demand, Price elasticity of supply, Economics, Mid price, Price elasticity of demand, Wealth elasticity of demand, Price level, Microeconomics
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