QUANTITY SURCHARGES ON GROCERIES

A quantity surcharge exists when the unit cost of a given brand is hig her for a large package than for a small one. This paper examines some product and household characteristics that influence observed quantit y surcharging practices. Results indicate that the propensity to buy a large package of a product is positively influenced by the extent of a household's usage of that product, procurement cost, and carrying ca pacity and is negatively influenced by the propensity to price search. A retailer's decision to levy a quantity surcharge is, in turn, influ enced by demand for the product, the propensity to buy large packages, and to some extent the product's carrying cost.