Monday, May 28, 2012

Why coupons? Price concealment information and memetic archeology in the pre-web world

Emily and I were wondering what business purpose coupons serve. They make brand price comparison labor intensive and hence unaffordable for most of us; this presumably allows both price discrimination (selling things at different prices to different markets), but it also enables companies to hide their prices from one another.

I couldn't find a good recent overview; the best I could do was a 1984 article by MC Narasimhan (A Price Discrimination Theory of Coupons).  A modern paper would want to include comparisons to Amazon's experiments with dynamic pricing, price hiding in pharmaceutical distribution, the regulatory and strategic concealment of physician office fees all in the context of game theory, information asymmetry (Akerlof, 1970s), and behavioral economics.

I can't find anything like this. So either we have a Google fail or yet another failure of modern economic academia (or perhaps a success of journal publisher information concealment, which is probably somehow related to coupon clipping).

Update: I gave this another 30 minutes of thought and realized there's a much more interesting explanation for this meme absentia.

This is pre-web economics; work done in the 1970s and 1980s. Discussions of affinity discounts, coupon clipping, frequent flyer mile economics and the like are the province of undergraduate textbooks. I shouldn't be looking in, I should be checking out DeLong and Krugman's posts, tumblrs, and tweets.

Except, of course in the 1970s Brad and Paul were high school students. Google's Usenet (1980s blog posts) archives start in 1981, and email lists aren't much older. The memetic gulf stream [1] that swept ideas from academia to geekdom didn't exist.

So this isn't really a Google or Academia fail, it's a need for new innovations in memetic archeology [2] within the pre-web world (early singularity: 1820-1995).

[1] As of 5/28/2012 Google has no results on "memetic gulf stream". Try it now.
[2] Seven real hits today. Try it now

PS. Emily points out that the OpenStax nonprofit textbook movement will expose many of these memes to the Google filter feeder. (Meme phracking?). Incidentally, I found that reference through my pinboard/wordpress microblog/memory management infrastructure now integrated into my personal google custom search.


Stuart Buck said...

What I don't understand is why there used to be little plastic boxes throughout grocery stores (at least in Cambridge, MA) that would automatically spit out coupons for a nearby product. Just an attention-getting way of running a sale? Doesn't really serve the end of price discrimination when all customers face zero search costs to find the coupon.

John Gordon said...

Good question Stuart, it does seem to defeat the purpose. Do those boxes still exist? Maybe grocery store owners who didn't benefit from that price discrimination?

I should add that coffee store membership cards fall into this bucket too.