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Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/37694

Title: Transaction costs as a source of consumer stockpiling
Authors: Garrod, Luke
Li, Ruochen
Wilson, Chris M.
Keywords: Consumer stockpiling
Transaction costs
Price discrimination
Quantity discounts
Differentiated markets
Issue Date: 2019
Publisher: De Gruyter
Citation: GARROD, L., LI, R. and WILSON, C.M., 2019. Transaction costs as a source of consumer stockpiling. B.E. Journal of Economic Analysis and Policy, In Press.
Abstract: Consumers often stockpile goods to store for future consumption. The existing theoretical literature has focussed on a price-based explanation where stockpiling arises due to temporary price reductions. In contrast, this paper explores a transaction-cost-based explanation where consumers stockpile to avoid the need to incur future transaction costs. It shows how transaction costs lead to positive consumer stockpiling in an oligopoly equilibrium even when future prices are expected to fall. Relative to a no-stockpiling benchmark, such stockpiling lowers profits, but improves consumer and total welfare. Our results extend to the case of quantity discounts where stockpiling consumers pay relatively lower per-unit prices than non-stockpiling consumers, when purchasing multi-unit bundles.
Description: This paper is in closed access until 12 months after publication.
Version: Accepted for publication
URI: https://dspace.lboro.ac.uk/2134/37694
Publisher Link: https://www.degruyter.com/view/j/bejeap
ISSN: 1538-0645
Appears in Collections:Closed Access (Economics)

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