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The Effects of Selling Complements and Substitutes on Consumer Willingness to Pay: Evidence from a Laboratory Experiment

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  • Matthew C. Rousu
  • Robert H. Beach
  • Jay R. Corrigan

Abstract

"Basic economic theory predicts that a consumer's willingness to pay for a good is affected by the availability of complements and substitutes. In an auction setting, this theory implies that the presence of complements would increase bid prices for a good, while the presence of substitutes would decrease bid prices for a good. We designed an experiment that allows the calculation of inverse elasticities, the inverse-demand equivalent of conventional price elasticities. Our results show that the availability of complements and substitutes affects bids in the expected directions. This finding has important implications for researchers who design experimental auctions." Copyright (c)2008 Canadian Agricultural Economics Society.

Suggested Citation

  • Matthew C. Rousu & Robert H. Beach & Jay R. Corrigan, 2008. "The Effects of Selling Complements and Substitutes on Consumer Willingness to Pay: Evidence from a Laboratory Experiment," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(2), pages 179-194, June.
  • Handle: RePEc:bla:canjag:v:56:y:2008:i:2:p:179-194
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    References listed on IDEAS

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    1. repec:eee:jfpoli:v:69:y:2017:i:c:p:82-96 is not listed on IDEAS
    2. Levan Elbakidze & Rodolfo M. Nayga Jr. & Hao Li & Chris McIntosh, 2014. "Value elicitation for multiple quantities of a quasi-public good using open ended choice experiments and uniform price auctions," Agricultural Economics, International Association of Agricultural Economists, vol. 45(2), pages 253-265, March.

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