Hassle costs and price discrimination: An empirical welfare analysis

Guillermo Marshall

Research output: Contribution to journalArticlepeer-review


This paper studies a market where soda is sold in both refillable and nonrefillable bottles. Purchasing refillables is inconvenient but cheaper. Using a discrete choice model, I find that price-sensitive customers put less weight on the inconveniences of purchasing refillables. This implies that a retailer can target lower prices to price-sensitive customers using the refillable segment. I evaluate the overall welfare consequences of this market segmentation and find that both customer welfare and profits would decrease (by 12.61 and 4.21 percent, respectively) if the refillables were removed, as there would be an important market-shrinkage effect.

Original languageEnglish (US)
Pages (from-to)123-146
Number of pages24
JournalAmerican Economic Journal: Applied Economics
Issue number3
StatePublished - 2015

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)


Dive into the research topics of 'Hassle costs and price discrimination: An empirical welfare analysis'. Together they form a unique fingerprint.

Cite this