Upward Sloping Demand Curves

Upward Sloping Demand Curves: "All this time I've been living under the impression that there wasn't a Santa Claus and that upward sloping demand curves were the unicorns of economic theory. Alas, I was wrong. The current presidential race had already convinced me that Santa Claus does in fact exist afterall, and he even comes with a running mate. And now I've finished reading the Anderson/Simester study (May 2000): The Role of Price Endings: Why Stores May Sell More at $49 than at $44 First, Santa Claus - and now I've had to throw in the towel on upward sloping demand curves as well. This joint Chicago/MIT study, utilizing a large catalog field test, found that increasing the price of an item from $44 to $49 may actually increase demand of that item (quantity demanded for the anal-retentive on the List) by up to 30%. This paradox is related to the 'fact' that $9 price endings lead to favorable customer price perceptions and increased customer demand. However, overuse of the $9 price ending dilutes this effect, as does the simultaneous use of sale signs. Furthermore, the study suggests that this is all a quite rational response to a marketing cue. Let's ponder the ramifications of this study. Now we have the possibility of parallel demand and supply curves . . .the absence of an equilibrium price and quantity . . .sacrilege!

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