Why Do Salespeople Spend So Much Time Lobbying for Low Prices?
Name
Simester_Why do salespeople.pdf
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725.48 KB
Format
Adobe PDF
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Author(s)
Simester, Duncan
Zhang, Juanjuan
Date Issued
May 2014
Journal
Marketing Science
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)
Citation
Simester, Duncan and Zhang, Juanjuan. “Why Do Salespeople Spend So Much Time Lobbying for Low Prices?” Marketing Science 33, no. 6 (November 2014): 796–808.
Version
Author's final manuscript
Abstract
In business-to-business settings a company's sales force often spends considerable time lobbying internally for authorization to charge lower prices. These internal lobbying activities are time consuming, and divert attention from other tasks, such as interacting with customers. We explain why internal lobbying activities serve an important role. They help the firm elicit truthful reporting of demand information from the sales force. As a result, it may be profitable for the firm to require lobbying (and make the requirement onerous), even though lobbying is a nonproductive activity that creates an additional administrative burden and imposes a deadweight loss.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
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DOI of Published Version
https://doi.org/10.1287/mksc.2014.0856
