Price Variation Antagonism and Firm Pricing Policies
Journal of Economic Behavior & Organization, 2010, 75, 2, 235-249
COURTY, Pascal, PAGLIERO, Mario, Price Variation Antagonism and Firm Pricing Policies, Journal of Economic Behavior & Organization, 2010, 75, 2, 235-249 - https://hdl.handle.net/1814/16421
Retrieved from Cadmus, EUI Research Repository
Pricing schemes that vary prices in response to demand shocks may antagonize consumers and reduce demand. At the same time, consumers may take advantage of the opportunities offered by price changes. Overall, the net impact of varying price on demand is ambiguous. We investigate this issue empirically, exploiting a unique dataset from a firm that has experimented with different pricing schemes. Each scheme is characterized by how much prices respond to fluctuations in demand and generates different amounts of price variability. We find that greater variability in prices does not lead to diminished demand. We discuss the implications of our findings in terms of the consumer antagonism hypothesis. (C) 2010 Elsevier B.V. All rights reserved.
Cadmus permanent link: https://hdl.handle.net/1814/16421
Full-text via DOI: 10.1016/j.jebo.2010.05.006
Publisher: Elsevier Science Bv
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