Skip to main content
Article thumbnail
Location of Repository

Price Discrimination and Fairness Concerns

By Florian Englmaier, Linda Gratz and Markus Reisinger

Abstract

We analyze the profitability of third degree price discrimination under consideration of consumers' fairness concerns within an experiment and explain the results within a theoretical framework. We find that with an increase in the price differential negative reciprocal reactions by disadvantaged consumers become stronger compared to positive reciprocal reactions by advantaged consumers. Consequently, the profit maximizing price differential lies below the one predicted to be optimal by standard theory. Further, profitability increases when consumers who are regarded as poorer are charged lower prices compared to when the wealth of the different consumer groups is unknown.

Topics: Volkswirtschaft, Diskussionsbeiträge, Seminar für Dynamische Modellierung (aufgelöst), ddc:330
Year: 2012
DOI identifier: 10.2139/ssrn.1999757
OAI identifier: oai:epub.ub.uni-muenchen.de:12735
Provided by: Open Access LMU

Suggested articles


To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.