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Pay-what-you-want because I do not know how much to charge you

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  • Tudón M., José F.

Abstract

With any positive fraction of altruistic consumers in the population who give away any positive fraction of their gains from trade, there exists a high enough level of uncertainty about demand such that the monopolist prefers pay-what-you-want over the traditional monopoly or any other pricing mechanism. Low marginal costs facilitate the adoption of pay-what-you-want. Consumer welfare always increases with pay-what-you-want.

Suggested Citation

  • Tudón M., José F., 2015. "Pay-what-you-want because I do not know how much to charge you," Economics Letters, Elsevier, vol. 137(C), pages 41-44.
    • Handle: RePEc:eee:ecolet:v:137:y:2015:i:c:p:41-44
    DOI: 10.1016/j.econlet.2015.10.021
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Pay-what-you-want; Uncertainty; Behavioral pricing; Participative pricing;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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