Do Consumers Care about How Prices Are Set?
AbstractUsing a survey approach, we ask consumers to reveal their preferences over pricing schemes that may differ in terms of the average price of consumption, the amount of price variation, and the probability of being rationed. We find that consumers dislike pricing schemes that vary prices more but that they are willing to trade off price variation and rationing. Surprisingly, they are not willing to trade off an increase in price variation for a decrease in expected prices. We discuss the implications of these findings for firm pricing policies.
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Bibliographic InfoPaper provided by European University Institute in its series Economics Working Papers with number ECO2008/03.
Date of creation: 2008
Date of revision:
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Consumer demand; rationing; demand fluctuation; antagonism; fairness;
Other versions of this item:
- Pascal Courty & Mario Pagliero, 2008. "Do Consumers Care about how Prices are Set?," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 15(1), pages 27-43.
- A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-26 (All new papers)
- NEP-MIC-2008-01-26 (Microeconomics)
- NEP-MKT-2008-01-26 (Marketing)
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