Pricing and Packaging: The Case of Marijuana

In many markets, unit prices decline as the quantity purchased rises, a phenomenon that can be considered part of the economics of packaging. This article reviews the economic foundations of quantity discounts and proposes new ways of measuring and analyzing them. These ideas are implemented with th...

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Bibliographic Details
Published inThe Journal of business (Chicago, Ill.) Vol. 79; no. 4; pp. 2019 - 2044
Main Author Clements, Kenneth W.
Format Journal Article
LanguageEnglish
Published Chicago The University of Chicago Press 01.07.2006
University of Chicago, acting through its Press
Subjects
Cannabis
Correlation analysis
Discounts
Economic analysis
Economic methodology
Economic theory
Histograms
Illicit drugs
Marijuana
Market analysis
Market prices
Markups
Mathematical models
Packaging
Price elasticity
Price policy
Prices
Quantity discounts
Standard deviation
Studies
Supply chain management
Volume discount
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Summary:In many markets, unit prices decline as the quantity purchased rises, a phenomenon that can be considered part of the economics of packaging. This article reviews the economic foundations of quantity discounts and proposes new ways of measuring and analyzing them. These ideas are implemented with the prices of marijuana, a product that is shown to be priced in a manner not too different from that used for groceries as well as some other illicit drugs. In broad terms, the results support the following pricing rule: the unit price falls by 2.5% when the package size increases by 10%.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0021-9398
1537-5374
DOI:10.1086/503655