Loss leader pricing and rain check policies are common in retail markets, yet research on these topics is surprisingly scarce. In this paper, we study the effects of leader pricing and rain check policy on stores' profits and market outcomes. Suppose stores can accurately predict demand. Might...

We present a model that leads to an equilibrium with characteristics similar to the following stylized facts observed in retail markets: (a) Retailers advertise only selected brands; (b) Often low priced advertised brands are understocked; (c) In-store promotions are biased towards more expensive...

In this paper, we analyze profitable pricing strategies when market segments overlap. Overlapping markets are segments that are not perfectly sealed, and leakage between them can occur. Different consumers are assumed to incur possibly different transaction costs if they choose to purchase in...

The price for a product may be set too low, causing the seller to leave money on the table, or too high, driving away potential buyers. Contingent pricing can be useful in mitigating these problems. In contingent pricing arrangements, price is contingent on whether the seller succeeds in...

This paper explores the benefits of letting customers escape from prepurchased service contracts by offering refunds for cancellations. We show that such a policy creates opportunities for in a capacity-constrained service—i.e., collecting cancellation fees from advance buyers who cancel, and...

Health-care experts believe that increases in portion sizes served by food vendors contribute to the obesity epidemic. This paper shows that food vendors can profit handsomely by using supersizing strategies where regular portion sizes are priced sufficiently high to discourage price-conscious...