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A Theory of Clearance Sales.

Abstract:

Clearance sales are widely used by firms as an intertemporal selling policy, in particular in markets where firms face demand uncertainty and need to choose capacity in advance. Clearance sales consist in charging a high price initially but then lowering the price in the sales period. High-valuation consumers purchase the good at the high initial price so as to avoid rationing at the low price, while low-valuation consumers wait for the price to drop. We develop a simple model of intertempora...

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Authors


Volker Nocke More by this author
Martin Peitz More by this author
Journal:
Economic Journal
Volume:
117
Issue:
522
Publication date:
2007
DOI:
URN:
uuid:d3823b5d-f455-4027-bf0c-1534a94da6b9
Local pid:
oai:economics.ouls.ox.ac.uk:12578
Language:
English

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