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Price fairness: square equity and mean pricing

Author

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  • Dubravko Radic

    (Chair of Service Management, Faculty of Economics and Management Science)

Abstract

Prices have a leverage effect on firm profits. Prices, however, have also an impact on customer’s perceived price fairness and thus indirectly on firm’s bottom line. A growing body of literature shows this. Papers on the level of the fair price, however, are rather scarce. Based on different concepts of justice, two levels of fair prices are proposed: square equity and mean prices. I run an experiment which shows that both are considered fairer than cost-based or value-based prices. The results can be used to assess fairness implications of prices ex ante and hence complement traditional pricing approaches.

Suggested Citation

  • Dubravko Radic, 2024. "Price fairness: square equity and mean pricing," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(2), pages 96-102, April.
    • Handle: RePEc:pal:jorapm:v:23:y:2024:i:2:d:10.1057_s41272-023-00418-w
    DOI: 10.1057/s41272-023-00418-w
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    References listed on IDEAS

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    1. Amanda Belarmino & Carola Raab & Tevfik Demirciftci, 2020. "The impact of resort fees on perceived fairness and destination brand image: an exploratory study," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 19(2), pages 129-137, April.
    2. Hermann Simon & Martin Fassnacht, 2019. "Fundamentals of Price Management," Springer Books, in: Price Management, chapter 1, pages 1-28, Springer.
    3. Ferguson, Jodie L., 2014. "Implementing price increases in turbulent economies: Pricing approaches for reducing perceptions of price unfairness," Journal of Business Research, Elsevier, vol. 67(1), pages 2732-2737.
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    5. Alexander W. Cappelen & Ulrik H. Nielsen & Bertil Tungodden & Jean-Robert Tyran & Erik Wengström, 2016. "Fairness is intuitive," Experimental Economics, Springer;Economic Science Association, vol. 19(4), pages 727-740, December.
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    7. Kanupriya Katyal & Vinay Kanetkar & Sanjay Patro, 2019. "What is a fair fare? Exploring the differences between perceived price fairness and perceived price unfairness," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(2), pages 133-146, April.
    8. Frey, Bruno S. & Pommerehne, Werner W., 1993. "On the fairness of pricing -- An empirical survey among the general population," Journal of Economic Behavior & Organization, Elsevier, vol. 20(3), pages 295-307, April.
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