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Do Consumers Care about How Prices Are Set?
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1725-6704
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EUI ECO; 2008/03
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COURTY, Pascal, PAGLIERO, Mario, Do Consumers Care about How Prices Are Set?, EUI ECO, 2008/03 - https://hdl.handle.net/1814/7763
Abstract
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.