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A strategic analysis of pricing strategies when consumers are inequity averse

  • In many situations, firms have an incentive to charge different prices to different consumers. A price discrimination strategy aims at exploiting differences in consumers' willingness to pay in order to increase the firm's profit. At the same time, consumers often evaluate a purchase transaction with respect to the perceived (un)fairness regarding the terms of the transaction, prices or qualities provided. If consumers are inequity averse to the extent that they care about whether other customers pay a lower relative price per quality, a quality based price discrimination may turn out less profitable than if consumers act selfishly. The dissertation project analyzes the impact of consumer social preferences on the implementation of different pricing strategies in monopolistic and duopolistic markets. It accounts for asymmetrically distributed information about product quality and emphasizes the optimal signaling strategies in a monopoly. Additionally, quality-based price discrimination is identified as the optimal strategy to eliminate potential competition under perfect information. In the context of third-degree price discrimination, the effect of inequity aversion on quality choices is analyzed.

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Metadaten
Author:Anna Lena Gerhard
URN:urn:nbn:de:hbz:992-opus4-1113
Place of publication:Vallendar
Referee:Peter-J. Jost, Ove Jensen
Document Type:Doctoral Thesis
Language:English
Date of Publication (online):2016/06/14
Publishing Institution:WHU - Otto Beisheim School of Management
Granting Institution:WHU - Otto Beisheim School of Management
Date of final exam:2016/04/15
Release Date:2016/06/14
Tag:Kundenverhalten; Preisbildungsstrategie; Ungleichheitsaversion
Page Number:168
Institutes:WHU Management Group / Chair of Organization Theory
Licence (German):Copyright this PhD thesis