Working Paper: CEPR ID: DP6533
Authors: Pascal Courty; Mario Pagliero
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.
Keywords: Antagonism; Consumer Demand; Demand Fluctuation; Fairness; Rationing
JEL Codes: A12; D01; D12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased price variation (P22) | decreased consumer acceptability (D18) |
| reduced rationing likelihood (D45) | increased consumer acceptability (D18) |
| increased price variation (P22) | decreased expected prices (E30) |