@ I Perdict
So you are telling me when a convience store has a sale on gas its the gas companies taking the hit?
Or when they have a sale on the soft drinks buy one get one free its the soda companies? Pizza hut - buy a pizza recieve a free 2 liter... I can tell you for a fact after it leaves Coke or Pepsi's hands its all on Pizza Hut.
It depends on the situation, that's why you have to do an individual analysis and you can't generalize.
In your example, you used Pizza Hut. However, since Pizza Hut is a private company I think, I will use Dominos Pizza Inc for comparison purposes. In Yahoo Finance, Domino's has an operating margin of 13.60% and 2.98%.
In this example, I will use the operating margin again (like in the PS3 calculation) - subscribing to the marginal benefit theory.
For a $25 pizza the margin is $3.40 in this example. To add a free item like a 2L Pop, is easy as it may only cost 70 cents. Therefore, for this transaction, the pizza seller still makes $2.70.
This is unlike the PS3 example, where the retailer does not have enough margin and the discount is so much greater.
