Author: Tomohisa Okada Publisher: ISBN: Category : Languages : en Pages : 17
Book Description
This paper explores the effects of the unpredictability of consumers' fairness concerns on monopolistic third-degree price discrimination. We develop a simple repeated game framework to consider the monopolist's pricing strategy in the long run. In contrast to previous studies, we focus on an information disclosure mechanism derived from unpredictability of consumers' fairness concerns: the intensity of the resulting backlash is unknown until firms treat consumers unfairly. Although consumers' fairness concerns tend to lead to uniform pricing even in the absence of fairness unpredictability, this mechanism enhances this tendency and works to sustain uniform pricing in the long run.
Author: Tomohisa Okada Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper studies monopolistic third-degree price discrimination, incorporating consumers' fairness concerns: discriminatory pricing antagonizes consumers and may reduce their demand. In contrast to the findings in previous studies, we show that consumers' concerns regarding price inequalities may deter discriminatory pricing by monopolists. Furthermore, a strong aversion to unfair pricing may improve social welfare compared with the situation in which consumers do not perceive price discrimination as unfair. Conversely, if the disutility from price inequality is not sufficiently large, social welfare decreases.
Author: Xiaomeng Guo Publisher: ISBN: Category : Languages : en Pages : 67
Book Description
Consumers with inequity aversion experience some psychological disutility when buying products at unfair prices. Empirical evidence and behavioral research suggest that consumers may perceive a firm's price as unfair when its profit margin is too high relative to consumers' surplus. We develop a game-theoretic model to investigate the effects of the consumer's inequity aversion on a firm's optimal pricing and quality decisions. We highlight several interesting findings. First, because of the consumer's uncertainty about the firm's cost, the firm's optimal quality may be non-monotone with respect to the degree of the consumer's inequity aversion. Second, stronger inequity aversion makes an inefficient firm worse off, but may benefit an efficient firm. Third, we show that stronger inequity aversion by the consumer can actually lower the consumer's monetary payoff (economic surplus) because the firm may reduce its quality to a greater extent than it reduces its price. Lastly, as the expected cost-efficiency in the market decreases, both the expected quality and the social welfare may increase rather than decrease.
Author: George Norman Publisher: Edward Elgar Publishing ISBN: Category : Business & Economics Languages : en Pages : 624
Book Description
This volume brings together significant articles which have appeared between 1971 and 1997, analyzing the application and effects of price discrimination.
Author: Nofar Duani Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
In a prominent Forbes magazine piece, Anderson (2019) asks whether ethics really matter to today's consumers. The answer to this question appears to be a resounding yes. “Unlike any other time in history, consumers are truly demanding more from the companies with which they do business. Today's shoppers are looking for ethical, eco-friendly brands that put people and the planet ahead of profits.” One need not look far for prominent examples of consumers' moral outrage over injustice and unfairness in the marketplace. Critiques of discrimination and unequal economic outcomes are abound, and often spread like wildfire in today's virtual spaces. Whether these changes reflect a fundamental shift in consumers' preferences or merely platformed and elevated by social media, it is undoubtable that companies face increasing pressures to behave more ethically. One survey of UK consumers found that more than half of those surveyed wanted companies to take a stand on issues they care about such as sustainability, transparency and fair employment practices (Accenture Strategy 2018). Companies that do not align with customer beliefs pay the price. Consumers avoid sellers they perceive as unfair and are more likely to demand refunds, complain, and spread negative word of mouth upon encountering unfair tactics (Fehr and Schmidt 1999; Xia and Monroe 2017; Xia, Monroe, and Cox 2004). In this research I study consumers' fairness concerns in two domains. In essay 1, I examine the perceived fairness of demographic price discrimination. In this joint work with Alixandra Barasch and Vicki Morwitz we study the demographic price discrimination in the digital age. We find that consumers' fairness perceptions depend on who consumers believe is responsible for implementing it--a person or an algorithm. Contrary to the substantial literature emphasizing consumers' algorithm aversion, we show that consumers view demographic-based price discrimination as more fair when prices are determined by algorithms (versus humans). We also offer evidence for a mechanism we propose: when demographic price discrimination is performed by algorithms, people are less likely to attribute the discriminatory action to the agent's moral agency. In essay 2, I explore consumers' perceptions of the fairness of the gender pay gap. In this work, conducted with Alixandra Barasch and Amit Bhattacharjee, we examine how consumers evaluate unequal economic outcomes arising from explicitly unbiased institutional processes. Three studies find that men perceive gender pay gaps as equally fair regardless of direction, while women perceive the exact same outcomes as more indicative of institutional unfairness when they are disadvantaged than when men are disadvantaged. Our findings highlight one reason for the contentiousness of discussions on outcome inequality: evidence for institutional discrimination and perceptions of what constitutes unbiased treatment may be in the eye of the beholder.
Author: Richard Schmalensee Publisher: North Holland ISBN: Category : Business & Economics Languages : en Pages : 1002
Book Description
Determinants of firm and market organization; Analysis of market behavior; Empirical methods and results; International issues and comparision; government intervention in the Marketplace.
Author: Guowei Liu Publisher: ISBN: Category : Languages : en Pages : 46
Book Description
Firms enjoy declining cost per unit of output with increasing cumulative output in a variety of industries, which gives rise to consumer concerns about transaction fairness. Consumers are less likely to purchase from a firm if it continues to reap an unfairly high profit margin. Intuitively, such consumer fairness concerns will induce firms to lower their prices. We develop an analytical framework to show, however, that firms may set higher prices with increasing consumer fairness concerns in the presence of competition. The indirect effect that consumer fairness concerns soften price competition caused by cost reductions dominates the direct effect that they intensify price competition caused by product substitution, when the cost-declining impact is sufficiently strong. Moreover, whether consumer fairness concerns increase or decrease social welfare also depends on the strength of the cost-declining effect. We also show the robustness of our main results by extending our model to a channel setting with quantity-discount contracts.
Author: Tomohisa Okada
Author: Tomohisa Okada
Author: Louis Phlips
Author: Xiaomeng Guo
Author: George Norman
Author: Florian Englmaier
Author: Nofar Duani
Author: United States. Congress. Senate. Committee on Small Business
Author: Richard Schmalensee
Author: Guowei Liu