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Consumer Resistance

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Listed:
  • Bertini, Marco
  • Buehler, Stefan
  • Halbheer, Daniel

Abstract

This paper studies the impact of consumer resistance, which is triggered by deviations from a psychological reference point, on optimal pricing and cost communication. Assuming that consumers evaluate purchases not only in the material domain, we show that consumer resistance reduces the pricing power and profit. We also show that consumer resistance provides an incentive to engage in cost communication when consumers underestimate cost. While cheap communication does not affect behavior, persuasive communication may increase sales and profit. Finally, we show that a firm can benefit from engaging in operational transparency by revealing information about features of the production process.

Suggested Citation

  • Bertini, Marco & Buehler, Stefan & Halbheer, Daniel, 2018. "Consumer Resistance," Economics Working Paper Series 1804, University of St. Gallen, School of Economics and Political Science.
    • Handle: RePEc:usg:econwp:2018:04
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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/econwp/EWP-1804.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mainardes, Emerson Wagner & Souza, Irailton Melo de & Correia, Rogério Dias, 2020. "Antecedents and consequents of consumers not adopting e-commerce," Journal of Retailing and Consumer Services, Elsevier, vol. 55(C).

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    More about this item

    Keywords

    Price Fairness; Cost Communication; Operational Transparency;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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