Working paper

Strategic Obfuscation and Retail Pricing

Céline Bonnet, Zohra Bouamra-Mechemache, Gordon Klein, and Timothy J. Richards

Abstract

Retailers often stock items that are only slightly differentiated from others??differ- ent sizes of a popular brand, or different ?avors in a common product line for instance. We argue that this practice is a form of strategic obfuscation, intended to raise con- sumer search costs, and margins on non-comparable products. We test our hypothesis using examples from several product categories in German and French retail scanner data. We ?nd that, after controlling for other explanations for how margins can vary with package size, we cannot rule out strategic obfuscation as a feature of our retail sales data.

Keywords

differentiation; price discrimination; retail pricing; search model; strategic obfuscation;

JEL codes

  • D43: Oligopoly and Other Forms of Market Imperfection
  • L13: Oligopoly and Other Imperfect Markets
  • M31: Marketing

Reference

Céline Bonnet, Zohra Bouamra-Mechemache, Gordon Klein, and Timothy J. Richards, Strategic Obfuscation and Retail Pricing, TSE Working Paper, n. 16-733, November 2016.

See also

Published in

TSE Working Paper, n. 16-733, November 2016