Markdowns in Seasonal Conspicuous Goods
Kenan Arifoğlu, Sarang Deo and Seyed Iravani examine why luxury retailers use markdowns on seasonal goods even though markdowns can undermine exclusivity. They build a game-theoretic model with strategic, exclusivity-seeking consumers who differ in their valuations. When consumers strongly value exclusivity the retailer may deliberately sell less than demand, a buying frenzy that raises willingness to pay, and stronger exclusivity seeking can push the retailer towards markdowns rather than a single price. Ignoring strategic consumer behaviour can be costly. The paper is a model and reports no data.
Kenan Arifoğlu, Sarang Deo and Seyed Iravani examine why luxury retailers use markdowns on seasonal goods even though markdowns can undermine exclusivity. They build a game-theoretic model with strategic, exclusivity-seeking consumers who differ in their valuations. When consumers strongly value exclusivity the retailer may deliberately sell less than demand, a buying frenzy that raises willingness to pay, and stronger exclusivity seeking can push the retailer towards markdowns rather than a single price. Ignoring strategic consumer behaviour can be costly. The paper is a model and reports no data.
Written from the repository abstract read 2026-10-21 via the ISB and UCL repositories.
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doi:10.1287/mksc.2020.1223. Read at the level of the repository abstract.