Abstract

http://ssrn.com/abstract=1624771
 
 

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Tariff-Specific Preferences and Their Influence on Price Sensitivity


Agnieszka Wolk


Independent

Bernd Skiera


University of Frankfurt - Department of Marketing

May 18, 2010

BuR Business Research Journal, Vol. 3, No. 1, May 2010

Abstract:     
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.

Number of Pages in PDF File: 11

Keywords: pricing, nonlinear pricing, tariff choice, tariff-specific preferences, price elasticity, flat rate, three-part tariffs, flat-rate bias, pay-per-use bias

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Date posted: June 14, 2010  

Suggested Citation

Wolk, Agnieszka and Skiera, Bernd, Tariff-Specific Preferences and Their Influence on Price Sensitivity (May 18, 2010). BuR Business Research Journal, Vol. 3, No. 1, May 2010. Available at SSRN: http://ssrn.com/abstract=1624771

Contact Information

Agnieszka Wolk
Independent ( email )
No Address Available
United States
Bernd Skiera (Contact Author)
University of Frankfurt - Department of Marketing ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
+49 (0)69 798 34640 (Phone)
+49 (0)69 798 35001 (Fax)
HOME PAGE: http://www.ecommerce.wiwi.uni-frankfurt.de/
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