G2TT
来源类型Discussion paper
规范类型论文
来源IDDP17156
DP17156 Price Saliency and Fairness: Evidence from Regulatory Shaming
Or Avishay-Rizi
发表日期2022-03-31
出版年2022
语种英语
摘要What are the effects of attention to the price paid by other consumers on consumer demand and firms' pricing decisions? We study the effects of a regulation that required Israeli retailers to display on-the-shelf signs indicating the (cheap) international price of a product alongside the price of that product in the local store. We find that prices of products included in the regulation fell on average by 8%. The price drop was larger for products that were initially more expensive compared to their international price. Following the price drop, quantities sold increased. Yet, these increases were significantly smaller than increases in quantities that we predict based on pre-regulation demand elasticities and the actual price drops. Products that remained relatively expensive vis-a-vis their international price exhibited larger differences between predicted and actual quantities sold. We develop a theoretical model that explains these findings, and estimate it to quantify the importance of salient unfair prices. We find that a 20 percentage-point salient difference between local and international prices is equivalent to a 1% increase in the price of the local product itself. Next, we use the model and its estimated parameters to calculate the impact of the regulation on consumer utility. We find that utility declined for some products included in the regulation. This happens when the disutility from observing that other consumers pay less exceeds the added utility from reduced prices and increased consumption. We discuss potential implications of our findings for optimal pricing strategies, price rigidity, and theoretical models of salient thinking.
主题Industrial Organization ; Organizational Economics
关键词Saliency Fairness Attention Uniform pricing Retail
URLhttps://cepr.org/publications/dp17156-0
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/546155
推荐引用方式
GB/T 7714
Or Avishay-Rizi. DP17156 Price Saliency and Fairness: Evidence from Regulatory Shaming. 2022.
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