Do Consumers Value Price Transparency?

43 Pages Posted: 16 Nov 2016 Last revised: 14 Oct 2017

See all articles by Katja Seim

Katja Seim

Yale School of Management

Maria Ana Vitorino

INSEAD; University of Minnesota - Carlson School of Management

David M. Muir

University of Delaware - Department of Business Administration

Date Written: September 13, 2017

Abstract

We examine the role of price transparency in consumer preferences and demand. We assemble a detailed dataset on the driving school industry in Portugal to quantify how firms present the price of the course of instruction, and its individual components, to potential students. Our unique data allows us to estimate a structural model of school choice and measure the impact of varying levels of price information on demand. The results show that consumers are willing to pay a significant amount for price transparency, on average 11 percent of the service price, and that consumer demographics drive heterogeneous preferences for transparency.

Keywords: Pricing, Transparency, Information, Consumer Valuation

JEL Classification: D43, D83, L13, L15, L84

Suggested Citation

Seim, Katja and Vitorino, Maria Ana and Muir, David M., Do Consumers Value Price Transparency? (September 13, 2017). Available at SSRN: https://ssrn.com/abstract=2868565 or http://dx.doi.org/10.2139/ssrn.2868565

Katja Seim

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Maria Ana Vitorino (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

HOME PAGE: http://www.maria-ana-vitorino.com/home.html

University of Minnesota - Carlson School of Management ( email )

3-150 Carlson School of Management
321 - 19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://www.maria-ana-vitorino.com/home.html

David M. Muir

University of Delaware - Department of Business Administration ( email )

20 Orchard Rd
Newark, DE 19716
United States

HOME PAGE: http://udel.edu/~muir

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