Tariff-specific preferences and their influence on price sensitivity
- For many services, consumers can choose among a range of optional tariffs that differ in their access and usage prices. Recent studies indicate that tariff-specific preferences may lead consumers to choose a tariff that does not minimize their expected billing rate. This study analyzes how tariff-specific preferences influence the responsiveness of consumers’ usage and tariff choice to changes in price. We show that consumer heterogeneity in tariff-specific preferences leads to heterogeneity in their sensitivity to price changes. Specifically, consumers with tariff-specific preferences are less sensitive to price increases of their preferred tariff than other consumers. Our results provide an additional reason why firms should offer multiple tariffs rather than a uniform nonlinear pricing plan to extract maximum consumer surplus.
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| Author: | Agnieszka WolkGND, Bernd SkieraORCiDGND |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-863113 |
| DOI: | https://doi.org/10.1007/BF03342716 |
| ISSN: | 2198-2627 |
| Parent Title (English): | Business research |
| Publisher: | VHB |
| Place of publication: | Göttingen |
| Document Type: | Article |
| Language: | English |
| Date of Publication (online): | 2014/02/28 |
| Year of first Publication: | 2010 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2024/07/16 |
| Tag: | flat rate; flat-rate bias; nonlinear pricing; pay-per-use bias; price elasticity; pricing; tariff choice; tariff-specific preferences; three-part tariffs |
| Volume: | 3.2010 |
| Issue: | 1 |
| Page Number: | 11 |
| First Page: | 70 |
| Last Page: | 80 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Angeschlossene und kooperierende Institutionen / E-Finance Lab e.V. | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Creative Commons - CC BY - Namensnennung 4.0 International |
