Do Coupons Expand or Cannibalize Revenue? Evidence from an e-Market

42 Pages Posted: 15 Feb 2016 Last revised: 25 Jul 2017

See all articles by Imke Reimers

Imke Reimers

Northeastern University - Department of Economics

Claire (Chunying) Xie

NERA Economic Consulting

Date Written: June 22, 2017


Coupons have been a mainstay of marketing for decades all over the world, but their short run and long run effects on sales are still not understood fully. We develop a model of consumer demand to empirically study whether firms can indeed use coupons as a means to price discriminate by attracting new consumers without losing (cannibalizing) revenue from existing ones, and whether these new consumers return to the firm after the price promotion. In addition, we ask what types of businesses are most likely to benefit from such promotions. Following alcohol revenue for restaurants using e-coupons, we find that offering a coupon increases demand during the promotion, and to a lesser degree after the promotion, suggesting that coupons can be used to price discriminate, while an advertising effect is less obvious. While coupons increase profits on average, the effect on each firm's profits depends on the firm's characteristics.

Keywords: Coupons, price discrimination, revenue cannibalization, market expansion, daily-deal sites

JEL Classification: L1, M31

Suggested Citation

Reimers, Imke and Xie, Chunying, Do Coupons Expand or Cannibalize Revenue? Evidence from an e-Market (June 22, 2017). Available at SSRN: or

Imke Reimers (Contact Author)

Northeastern University - Department of Economics ( email )

301 Lake Hall
Boston, MA 02115
United States

Chunying Xie

NERA Economic Consulting ( email )

50 Main Street, 14th Floor
White Plains, NY 10606
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics