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The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation

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  • Shi, Lijia
  • Gao, Zhifeng
  • Chen, Xuqi

Abstract

Previous literature has shown that potential buyers use a reference price or product to form their opinion about the value of a new product. Therefore, the pricing decision is an interactive process. We investigate the two generalizations of the cross-price effect (the neighborhood price effect and the asymmetric price effect) on consumer willingness-to-pay (WTP) for multiple similar products in an open-ended contingent valuation context. Results show that the cross-price effect on WTP is prominent, with the neighborhood price effect holding in contingent valuation. No conclusions are reached about the asymmetric price effect.

Suggested Citation

  • Shi, Lijia & Gao, Zhifeng & Chen, Xuqi, 2014. "The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation," Food Policy, Elsevier, vol. 46(C), pages 13-21.
    • Handle: RePEc:eee:jfpoli:v:46:y:2014:i:c:p:13-21
    DOI: 10.1016/j.foodpol.2014.01.009
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