Do Consumers Care about How Prices Are Set?
Title: Do Consumers Care about How Prices Are Set?
Publisher: European University Institute
Series/Report no.: EUI ECO; 2008/03
Using 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.
Subject: A12; D01; D12; Consumer demand; rationing; demand fluctuation; antagonism; fairness
Type of Access: openAccess