Does Responsive Pricing Increase Efficiency? Evidence from Pricing Experiments in an Internet Café
AbstractResponsive pricing proposes to increase efficiency by introducing a direct linkage between market conditions and changes in prices. This link is established by giving selective discounts that vary in real time as a function of the level of unused capacity. Using data from a unique pricing experiment in Internet cafés, we address the question of whether consumers respond to instantaneous price changes, and whether responsive pricing increases welfare. Our results show that the most responsive scheme in our sample increases occupancy by 11% over peak-load pricing. Welfare increases by an amount that corresponds to 12% of total consumer expenditure.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4149.
Date of creation: Dec 2003
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- D60 - Microeconomics - - Welfare Economics - - - General
- R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-29 (All new papers)
- NEP-EXP-2004-02-29 (Experimental Economics)
- NEP-GEO-2004-02-29 (Economic Geography)
- NEP-MIC-2004-02-29 (Microeconomics)
- NEP-NET-2004-04-11 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Courty, Pascal & Pagliero, Mario, 2003.
CEPR Discussion Papers
4036, C.E.P.R. Discussion Papers.
- Jeffrey K. MacKie-Mason & Hal R. Varian, 1994.
"Some Economics of the Internet,"
- Robert H. Patrick & Frank A. Wolak, 2001. "Estimating the Customer-Level Demand for Electricity Under Real-Time Market Prices," NBER Working Papers 8213, National Bureau of Economic Research, Inc.
- Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
- Aubin, Christophe, et al, 1995.
"Real-Time Pricing of Electricity for Residential Customers: Econometric Analysis of an Experiment,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 10(S), pages S171-91, Suppl. De.
- Aubin, Christophe & Fougère, Denis & Husson, Emmanuel & Ivaldi, Marc, 1994. "Real-Time Pricing of Electricity of Residential Customers: Econometric Analysis of an Experiment," IDEI Working Papers 46, Institut d'Économie Industrielle (IDEI), Toulouse.
- Crew, Michael A & Fernando, Chitru S & Kleindorfer, Paul R, 1995. "The Theory of Peak-Load Pricing: A Survey," Journal of Regulatory Economics, Springer, vol. 8(3), pages 215-48, November.
- Peter M. Schwarz & Thomas N. Taylor & Matthew Birmingham & Shana L. Dardan, 2002. "Industrial Response to Electricity Real-Time Prices: Short Run and Long Run," Economic Inquiry, Western Economic Association International, vol. 40(4), pages 597-610, October.
- Herriges, Joseph A. & Baladi, S. M. & Caves, Douglas W. & Neenan, B. F., 1993.
"The Response of Industrial Customers to Electric Rates Based Upon Dynamic Marginal Costs,"
Staff General Research Papers
1497, Iowa State University, Department of Economics.
- Herriges, Joseph A, et al, 1993. "The Response of Industrial Customers to Electric Rates Based upon Dynamic Marginal Costs," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 446-54, August.
- William Vickrey, 1971. "Responsive Pricing of Public Utility Services," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 337-346, Spring.
- Courty, Pascal & Pagliero, Mario, 2010.
"Price variation antagonism and firm pricing policies,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 75(2), pages 235-249, August.
- Pascal Courty & Mario Pagliero, 2006. "Price Variation Antagonism and Firm Pricing Policies," Economics Working Papers ECO2006/27, European University Institute.
- Courty, Pascal & Pagliero, Mario, 2007. "Price Variation Antagonism and Firm Pricing Policies," CEPR Discussion Papers 6663, C.E.P.R. Discussion Papers.
- Pascal Courty & Mario Pagliero, 2008. "Price Variation Antagonism and Firm Pricing Policies," Economics Working Papers ECO2008/02, European University Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.