at Google ScholarTitle data
Herweg, Fabian ; Mierendorff, Konrad:
Uncertain Demand, Consumer Loss Aversion, and Flat-Rate Tariffs.
In: Journal of the European Economic Association.
Vol. 11
(2013)
Issue 2
.
- pp. 399-432.
ISSN 1542-4774
DOI: https://doi.org/10.1111/jeea.12004
Abstract in another language
We consider a model of firm pricing and consumer choice, where consumers are loss averse and uncertain about their future demand. Possibly, consumers in our model prefer a flat rate to a measured tariff, even though this choice does not minimize their expected billing amount—a behavior in line with ample empirical evidence. We solve for the profit-maximizing two-part tariff, which is a flat rate if (a) marginal costs are not too high, (b) loss aversion is intense, and (c) there are strong variations in demand. Moreover, we analyze the optimal nonlinear tariff. This tariff has a large flat part when a flat rate is optimal among the class of two-part tariffs.
Further data
| Item Type: | Article in a journal |
|---|---|
| Refereed: | Yes |
| Keywords: | Consumers' preferences research; pricing; profit; consumer behavior; consumer attitudes |
| Institutions of the University: | Faculties Faculties > Faculty of Law, Business and Economics Faculties > Faculty of Law, Business and Economics > Department of Economics Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VIII: International Competition Policy Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics VIII: International Competition Policy > Chair Economics VIII: International Competition Policy - Univ.-Prof. Dr. Fabian Herweg Profile Fields > Emerging Fields > Innovation and Consumer Protection Profile Fields Profile Fields > Emerging Fields |
| Result of work at the UBT: | No |
| DDC Subjects: | 300 Social sciences > 330 Economics |
| Date Deposited: | 11 Feb 2015 09:20 |
| Last Modified: | 26 Jul 2022 10:26 |
| URI: | https://eref.uni-bayreuth.de/id/eprint/6671 |