NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Prices and Coupons for Breakfast Cereals

Aviv Nevo, Catherine Wolfram

NBER Working Paper No. 6932
Issued in February 1999
NBER Program(s):   IO

This paper explores the relationship between shelf prices and manufacturers' coupons for 25 ready-to-eat breakfast cereals. Contrary to the predictions of static monopoly price discrimination, we find the shelf prices for a particular brand in a particular city are generally lower during periods when coupons are available. We find evidence that is also inconsistent with dynamic theories of pricing that predict lower prices and coupons after periods of low demand, and find little support for explanations of couponing based on the vertical relationship between manufacturers and retailers. We find some support for models of price discrimination in oligopoly settings that suggest inter-brand competition can cause all prices to be lower than the uniform (non-discriminatory) price. We also find some evidence suggesting that firm-wide incentives may induce managers to use coupons and price cuts simultaneously in order, for example, to meet market share targets.

download in pdf format
   (219 K)

email paper

This paper is available as PDF (219 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Nevo, Aviv and Catherine Wolfram. "Why Do Manufacturers Issue Coupons? An Empirical Analysis Of Breakfast Cereals," Rand Journal of Economics, 2002, v33(2,Summer), 319-339.

Users who downloaded this paper also downloaded these:
Nevo w6387 Measuring Market Power in the Ready-to-Eat Cereal Industry
Hausman Valuation of New Goods under Perfect and Imperfect Competition
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us