Pay-What-You-Want Because I Do Not Know How Much to Charge You
9 Pages Posted: 17 Aug 2015
Date Written: August 15, 2015
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.
Keywords: Pay-what-you-want, uncertainty, behavioral pricing, participative pricing
JEL Classification: D40, D81, L11
Suggested Citation: Suggested Citation
Tudón, José, Pay-What-You-Want Because I Do Not Know How Much to Charge You (August 15, 2015). Available at SSRN: https://ssrn.com/abstract=2644963 or http://dx.doi.org/10.2139/ssrn.2644963
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