Strategic Obfuscation and Retail Pricing

Consumer-product manufacturers-and retailers that sell their products-often sell slightly differentiated items for reasons other than appealing to heterogeneous tastes-different sizes of a popular brand, or different flavors in a common product line for instance. We argue that this practice is a form of strategic obfuscation, which is intended to make price-comparison more difficult, and thereby raise margins on non-comparable products. We test our hypothesis with the use of examples from consumer-packaged good categories in German and French retail scanner data. We find that-after controlling for other explanations for how margins can vary with package size and type-we cannot rule out strategic obfuscation as a feature of our retail sales data.