Why Are Products Sold on Sale? Explanations of Pricing Regularities.

This paper reports on interesting changes in markdown pricing practices over time and differences in the pricing within a product line. The price discrimination and the uncertainty hypotheses appear to better explain the data than the peak load hypothesis. Fashion has become more important over time and appears to explain the greater seasonal variation in retail apparel prices in recent years. Differences in uncertainty also explains differences in the pricing of different types of men's dress shirts. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.