New pricing model boosts consumption and benefits most consumers in villages
The article explores how prices of basic food items in developing countries are set in a way that benefits most consumers. By studying consumer preferences and income levels, the researchers found that sellers use quantity discounts to price discriminate, leading to higher consumption levels and lower prices. This non-linear pricing model is more accurate than the standard model and shows that policies like cash transfers can influence sellers' pricing strategies. Overall, non-linear pricing tends to benefit consumers, especially those buying small quantities.
