Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/293965 
Authors: 
Year of Publication: 
2023
Citation: 
[Journal:] The Journal of Industrial Economics [ISSN:] 1467-6451 [Volume:] 72 [Issue:] 1 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2023 [Pages:] 548-597
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
Firms often sell a transparent base product and a valuable add-on. If only some consumers are aware of the latter, the add-on's effect on the base product's price will be ambiguous. Cross-subsidization between products to bait uninformed consumers might lower, intrinsic utility from the add-on for informed consumers might raise the price. We study this trade-off in the gasoline market by exploiting an alcohol sales prohibition at stations as an exogenous shifter of add-on availability. Gasoline margins drop by 5% during the prohibition. The effect is mediated by shop variety and competition. Using traffic data, we unveil sizeable consumer-side reactions.
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Document Type: 
Article
Document Version: 
Published Version

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