TITLE:
Deriving an Optimal Restaurant Coupon Discount Rate: Evidence and Discussion
AUTHORS:
Tin-Chun Lin
KEYWORDS:
Optimal Coupon Discount Rate, Price Elasticity of Demand, Restaurant Industry
JOURNAL NAME:
Theoretical Economics Letters,
Vol.8 No.10,
June
19,
2018
ABSTRACT: The model of third-degree price discrimination was
used to derive the optimal coupon discount rate. Results showed that the
optimal discount rate is related to the price elasticity of demand for
restaurant sales in the market that do not involve coupons (the first market)
and in the market with coupons (the second market). In light of the theoretical
and data evidence, we also found that the price elasticity of demand for
restaurant sales in both markets (with and without coupons) is elastic, and
greater in the second market (with coupons) than in the first market (without
coupons).