Effect of price-discount distribution in multi-unit price promotions on consumers' willingness to pay, sales value, and retailers' revenue

Using multi-unit auctions, we examined the effect of different distributions of price discount acrossmultiple units of a relatively new product on consumers’ Willingness to Pay (WTP), sales value andretailers’ revenue. We found that allowing the price discount to be increasing in the number of unitsincreases willingness to pay, sales value and retailers’ revenue and that a price discount that is uniformlydistributed across units also has the potential to motivate consumers to buy more units of the product.However, multi-unit price promotions that concentrate all the amount of price discount on the last unitonly generate a weak positive effect on sales value.