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Firm prominence and price framing

Author

Listed:
  • Chioveanu, Ioana
  • Gu, Yiquan
  • Wenzel, Tobias

Abstract

This paper explores the strategic use of price framing in a duopoly where firms differ in their prominence and where both frame differentiation and frame complexity are sources of consumer confusion. It analyzes the interaction between the relative effectiveness of the two sources of consumer confusion and firms’ prominence levels, and its impact on equilibrium outcomes. A parametric condition on firms’ prominence delineates different equilibrium outcomes and synthesizes the interaction between firm prominence and consumer confusion. In equilibrium, firms do not always coordinate on the most effective source of confusion. The impact of consumer protection policy on market outcomes, especially consumer surplus, depends crucially on underlying market conditions, and can be ineffective or even detrimental to consumers.

Suggested Citation

  • Chioveanu, Ioana & Gu, Yiquan & Wenzel, Tobias, 2026. "Firm prominence and price framing," Journal of Economic Behavior & Organization, Elsevier, vol. 243(C).
    • Handle: RePEc:eee:jeborg:v:243:y:2026:i:c:s0167268126000466
    DOI: 10.1016/j.jebo.2026.107458
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    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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