ECONOMICS OF PARK-AND-SHOP DISCOUNTS - A CASE OF BUNDLED PRICING STRATEGY

Abstract

The economic implications of two ''park-and-shop'' discount programmes are analysed. These are a no-bundling strategy (no parking discount to shoppers) and a mixed-bundling strategy (parking discount to shoppers). Supplier surplus and total social surplus models are formulated through a two-item example and their corresponding optimal discounts are determined. The implications for seller profit and total social surplus are presented.