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Abstract

This paper is a discourse on how promotion may contribute to the efficiency of consumption. The view is taken that, through its addition to the quantity of search with respect to product characteristics, promotion may enable consumers to allocate their expenditures more efficiently and yield additional revenue to producers of the promoted product. The central plea is for consistency in the identification of promotion objectives, the implementation of the promotion program and monitoring of the outcome. In an idiosyncratic way, the promotion objectives are framed as being related to price and income elasticities and it is argued that promotional outcomes should be monitored in terms of these elasticities. Supply shifts may complement promotion strategies to the advantage or disadvantage of producers and the outcomes in terms of producer surplus are examined for particular promotion strategies and shifts in linear supply functions.

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