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Consumer Resistance

Author

Listed:
  • Halbheer, Daniel

    ()

  • Bertini, Marco

    ()

  • Buehler, Stefan

    ()

Abstract

This paper studies the impact of consumer resistance, which is triggered by deviations from a psychological reference point, on optimal pricing and cost communication. Assuming that consumers evaluate purchases not only in the material domain, we show that consumer resistance reduces the pricing power and profit. We also show that consumer resistance provides an incentive to engage in cost communication when consumers underestimate cost. While cheap communication does not affect behavior, persuasive communication may increase sales and profit. Finally, we show that a firm can benefit from engaging in operational transparency by revealing information about features of the production process.

Suggested Citation

  • Halbheer, Daniel & Bertini, Marco & Buehler, Stefan, 2018. "Consumer Resistance," HEC Research Papers Series 1251, HEC Paris, revised 16 Feb 2018.
  • Handle: RePEc:ebg:heccah:1251
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    Price Fairness; Cost Communication; Operational Transparency;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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