Unfair allocation of gains under equal price in cooperative purchasing

Cooperative purchasing is becoming more and more common practice. However, many cooperative initiatives end prematurely or do not flourish. Important reasons indi-cated for these problems are directly or indirectly related to the unfair allocation of gains. The purpose of this paper is to analyse causes of unfairness in current cooperative practices, and in particular unfairness resulting from using the Equal Price allocation concept. I suggest that the unfair effects of this commonly used concept are caused by neglecting a specific part of the added value of cooperative initiative members. Moreover, I prove that when using the Equal Price concept organisations will receive fewer gains if they increase their volume past 38% of the total volume of a cooperative initiative. In case of a constant total volume I prove that Equal Price reaches its maximum pay-off when the volume of an organisation equals 25%. I conclude by emphasizing the importance of cooperative members becoming aware of allocation concept problems. Further research will involve possible solutions to these problems

Unfair allocation of gains under the Equal Price allocation method in purchasing groups

Certain purchasing groups do not flourish. A supposed reason for this is a creeping dissatisfaction among various members of a group with the allocation of the cooperative gains. In this paper, we analyze unfairness resulting from using the commonly used Equal Price (EP) method for allocating gains under the assumption of continuous quantity discounts. We demonstrate that this unfairness is caused by neglecting a particular component of the added value of individual group members. Next, we develop two fairness ratios and tie these to fairness properties from cooperative game theory. The ratios show among other things that being too-big a player in a purchasing group can lead to decreasing gains. They can be used to assess if EP is an unfair method in specific situations. Finally, we discuss measures a purchasing group could consider in order to attenuate perceived unfairness. Thereby, the group may improve its stability and prosperity

Explorations in price (un)fairness.

Consumers may use multiple reference points-including cost of goods, past prices, and competitive prices-to judge price fairness. Across a series of studies we show that consumers are inclined to overestimate profits, often to an extreme extent. We further demonstrate that prices are perceived to be unfair because consumers fail to take into account vendor costs, underestimate the effects of inflation, and attribute competitive price differences to profits. Potential corrective interventions by marketers-such as cueing costs, providing historical price information, and explaining price differences-were insufficient to eliminate unfairness perceptions. In addition, prices for goods were found to be stickier than prices for services and therefore were especially susceptible to these systematic perceptions of unfairness.Prices; Studies; Costs; Effects;

Unfair division of gains under equal price in cooperative purchasing

Cooperative purchasing is becoming more and more common practice. However, many cooperative initiatives end prematurely or do not flourish. Important reasons indicated for these problems are directly or indirectly related to the unfair division of gains. The purpose of this paper is to indicate causes of unfairness effects in current cooperative practices, aiming to enhance cooperative trust and stability. Results incorporate an extensive analysis of the most commonly used allocation concept, the Equal Price. We prove that the unfair effects of this concept are caused by neglecting a part of the added value of cooperative initiative members. Moreover, we prove that the Equal Price allocation value reaches its maximum when the volume of an organisation equals a certain percentage of the total volume of a cooperative initiative. So, when using the Equal Price organizations increasing their volume past this point will receive less gains. We conclude by emphasizing that it is highly important that cooperative members are aware of allocation concept problems. Further research will involve solutions to these problems

Unfairness in consumer services: Outcomes of differential treatment of new and existing clients

In a consumption context, there is a growing interest in understanding unfair behaviour of firms towards customers. Our research focuses on unfairness perceptions driven by differential treatment, particularly through price discrimination, i.e. the practice of charging differential prices to different customers. Our purpose is to investigate the consequences of these practices for unfairness perceptions, satisfaction, trust and patronage, showing a dual perspective: the perceptions of new vs existing clients when they face the advantaged or disadvantaged conditions. A survey-based experimental design approach was used. We conclude that unfairness perception is stronger for existing than for new clients, prompting negative attitudinal and behavioural consequences when the former are exposed to disadvantaged conditions in relation to the latter. Our study aims to provide marketers with a perspective on the pitfalls related to differential treatment between present and prospective clients, with implications in terms of design and implementation of customer management strategies

The Effects of the Timing of Post-Purchase Price Reductions and Brand Strength on Consumers' Price Unfairness Perceptions

Pricing literature examined the impact of price increases or decreases on price unfairness perceptions in pre-purchase contexts but post-purchase price reduction context received limited attention. Moreover, the impact of brand strength on perceptions of price unfairness in a post-purchase price reduction context has received little attention despite evidence that shows that brand names impact consumers' internal reference price and quality perceptions. Hence, this dissertation aims to close this gap by inquiring about the impact of brand strength and depth of post-purchase price reductions on price unfairness perceptions over time by relying on construal level theory and acquisition-transaction value model. In two experiments, four new scales that are suitable for post-purchase price reduction context were developed and refined: Perceived price unfairness, perceived negative transaction value, perceived loss in acquisition value, and internal reference price. The model was tested with a structural equations model. In experiment one, when the temporal distance was proximal, advertised selling price, which is a low level construal, was more influential on perceived loss in acquisition value. On the other hand, when the temporal distance was far, perceived quality, which is a high level construal, was more influential on perceived loss in acquisition value in line with predictions of construal level theory that assert high level construals are more influential at far but low level construals are more impactful at proximal temporal distance. Consumers perceived more price unfairness and negative transaction value when the post-purchase price reduction was proximal to their purchase than when it was far. In the high price reduction condition, consumers perceived higher perceived negative transaction value and higher perceived price unfairness than in the low price reduction condition. In experiment two, temporal distance moderated the relationship from advertised selling price to perceived negative transaction value such that advertised selling price was influential on perceived negative transaction value at proximal temporal distance but not at far temporal distance as expected by construal level theory.Ph.D., Business Administration -- Drexel University, 201

Percepção de injustiça em aumentos de preço: um estudo experimental

This experimental study investigates antecedents and consequences of perceptions of price unfairness in a price increase situation. The proposed theoretical model states that consumer dependence on the service provider as well as the relevance the consumer attributes to the service (for the consumer's life) will affect his/her degree of (a) unfairness price perception, (b) anger, and (c) intention to complain and retaliate. The results support all the hypotheses specified in the model. The findings not only indicate that some situations of unfairness price perception lead to stronger emotions and more dramatic reactions from consumers, but also allow us to predict which situations of perceived unfairness offer greater risks and have greater potential for conflict.En este artículo se presenta un estudio en que se analizan los antecedentes y las consecuencias de la percepción de injusticia en una situación de aumento de precio. En el modelo teórico propuesto se afirma que la dependencia del consumidor con relación al proveedor del servicio y la relevancia que el consumidor atribuye al servicio afectarán el grado de percepción cuanto a injusticia de precios, rabia e intenciones de queja y represalia. Los resultados sostienen todas las hipótesis especificadas en el modelo e indican que determinadas situaciones de percepción de injusticia no sólo conducen a emociones más fuertes y reacciones más dramáticas por parte del consumidor, sino que también permiten que se anticipen aquellas situaciones de injusticia percibida que presenten mayores riesgos y alto potencial de conflicto.Neste artigo, apresenta-se experimento realizado com o objetivo de investigar os antecedentes e as consequências da percepção de injustiça em uma situação de aumento de preço. No modelo teórico proposto afirma-se que a dependência do consumidor em relação ao fornecedor do serviço e a relevância que o consumidor atribui ao serviço afetarão os graus de percepção quanto à injustiça de preços, de raiva e de intenções de reclamar e retaliar. Os resultados dão suporte a todas as hipóteses especificadas no modelo. Os resultados indicam que certas situações de percepção de injustiça não apenas levam a emoções mais fortes e reações mais dramáticas por parte de consumidores, mas também permitem que se antecipem quais as situações de injustiça percebida que oferecem maiores riscos e maior potencial de conflito

Why pay extra? Tipping and the importance of social norms and feelings in economic theory

Tipping is a multi-billion-dollar phenomenon that standard economic models find hard to explain. I discuss several aspects of tipping and divide tipping to six different categories: reward-tipping, price- tipping, tipping-in-advance, bribery-tipping, holiday-tipping and gift- tipping, and discuss the economics of each category. Often tipping has economic justification, because it solves some inefficiency and increases welfare. Analyzing the potential reasons for tipping illustrates the importance of social norms and feelings (e.g. embarrassment and unfairness felt when one does not tip) in motivating economic behavior. Retaliatory behavior that workers sometimes exhibit towards non-tipping patrons is then discussed, and ideas for future research are proposed.Tipping; Social norms; Feelings; Consumer behavior; Restaurants; behavioral economics

Pola Pemasaran dan Ketersediaan Pupuk Pasca Kebijakan Pengendalian Distribusi Pupuk Urea Maret 2001

Free trade policy which is hope could avoid scarcity of fertilizer, at the end wascausing the condition of fertilizer scarcity. This condition push the government to replied thepolicy of urea control distribution. This research has an objective to evaluate the impact ofthese policy to marketing efficiency and fertilizer supply. Data and information was gatheredby using Rapid Rural Appraisal Method in some level of respondent in Kabupaten Subangand Garut on February 2001. The data was analysed by using description method with crosstabulation. The result of these analysis showed that the impact of urea control distributiongovernment supply with small variants of price. In the other way, for producer and tradersthis policy was give disincentive to them, but on the other hand their marketing systems quiteefficient. We still found some weakness factor which is caused the minimum function ofdealers/distributors, this all caused by unfairness between them. The indicate analysisshowed that comparable fertilizer use was not applied yet. To create sustainability infertilizer distribution, the unfairness should be eliminate. To control the price of fertilizercould be done as follows: (1) to push raw material price. In this case natural gases; (2) Todelete the obligation of Pusri in using storage in the Pusri fertilizer port; (3) to suggest valueadded tax 10 percent in fertilizer selling process, by this scenario we assumed that it willhelp them to use comparable fertilizer so the extension to farmer will keep continue

Low-Income Consumers in Brazil: Nuances of a Market That Can No Longer Be Ignored

The main goal of this paper is to better understand the low income Brazilian market, supported by two basic concepts: price unfairness and perceived product value. In order to meet the research objective a qualitative approach, based on two methodological procedures – observation and in-depth interviews –, was used. The findings indicate that small neighborhood retailers, despite lacking adequate physical infrastructure and management skills, play an important role in meeting the needs of low-income consumers. They offer convenience, personalized services, easy and uncomplicated credit (on an informal basis), and a product mix that matches the needs and desires of their customers. It was also found that although these small retailers charge higher prices than large supermarket chains, their customers still see value in their offerings and do not consider the prices asked to be unfair: they recognize that the benefits they receive outweigh the higher prices they pay. It was also found that low-income consumers relate with neighborhood retail stores in a basis that goes beyond the mere business, but in a cultural basis too. These small stores function not only as points of sale, but also as places where people can meet and discuss issues related to the local community. The principal contribution of this paper is in providing substantive information about the nuances of a market that has hitherto not been adequately explored but that holds a potential that can no longer be ignored. In Brazil, this market contains nearly 90 million consumers, eager to be included in the world of consumption. The findings presented by this study are of relevance not only to academic organisations and businesses, but also to social organizations and public policymakers responsible for improving the quality of life of the poor