Arbeitspapier

Shrinking Goods

If producers have more information than consumers about goods’ attributes, then they may use non-price (rather than price) adjustment mechanisms and, consequently, the market may reach a new equilibrium even if prices don't change. We study a situation where producers adjust the quantity per package rather than the price in response to changes in market conditions. Although consumers should be indifferent between equivalent changes in goods' prices and quantities, empirical evidence suggests that consumers often respond differently to price changes and equivalent quantity changes. We offer a possible explanation for this puzzle by constructing and empirically testing a model in which consumers incur cognitive costs when processing goods’ price and quantity information.

Language
Englisch

Bibliographic citation
Series: Emory University Working Paper ; No. 13-03

Classification
Wirtschaft
Production, Pricing, and Market Structure; Size Distribution of Firms
Information and Product Quality; Standardization and Compatibility
Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
Business Economics
Marketing
Advertising
Marketing and Advertising: Government Policy and Regulation
Regulation and Business Law: General
Price Level; Inflation; Deflation
Firm Behavior: Theory
Firm Behavior: Empirical Analysis
Market Structure, Pricing, and Design: General
Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Subject
Quantity Adjustment
Cognitive Costs of Attention
Information Processing

Event
Geistige Schöpfung
(who)
Levy, Daniel
Snir, Avichai
Event
Veröffentlichung
(who)
Emory University
(where)
Atlanta, GA
(when)
2013-01-22

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Levy, Daniel
  • Snir, Avichai
  • Emory University

Time of origin

  • 2013-01-22

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