Paying More for Less : Why Don't Households in Tanzania Take Advantage of Bulk Discounts?
Do poor households shop in a way that leaves money on the table? A simple way to maximize consumption, conditional on available cash, is to avoid regularly purchasing small amounts of nonperishable goods when bulk discounts are available at modestl...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/730361582831429968/Paying-More-for-Less-Why-Dont-Households-in-Tanzania-Take-Advantage-of-Bulk-Discounts http://hdl.handle.net/10986/33410 |
| Summary: | Do poor households shop in a way that
leaves money on the table? A simple way to maximize
consumption, conditional on available cash, is to avoid
regularly purchasing small amounts of nonperishable goods
when bulk discounts are available at modestly larger
quantities. Using two-week transaction diaries covering
48,501 purchases by 1,493 households in Tanzania, this paper
finds that through bulk purchasing the average household
could spend 8.7 percent less without reducing purchasing
quantities. Several explanations for this pattern are
investigated, and the most likely mechanisms are found to be
worries about over-consumption of stocks and avoidance of
social taxation. Contrary to prior work, there is little
indication that liquidity constraints prevent poorer
households in the sample from buying in bulk, possibly
because the bulk quantities under examination are not very large. |
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