Consumer Resistance

30 Pages Posted: 12 Feb 2018 Last revised: 22 Jun 2018

See all articles by Marco Bertini

Marco Bertini

ESADE - Ramon Llull University

Stefan Buehler

University of St. Gallen - SEPS: Economics and Political Sciences

Daniel Halbheer

HEC Paris - Marketing

Date Written: June 22, 2018

Abstract

This paper shows that reference-dependent preferences trigger consumer resistance and studies how such consumer behavior impacts pricing and cost communication. We show that consumer resistance reduces the pricing power and profit of the firm. We also show that consumer resistance may provide an incentive for the firm to engage in cost transparency. While cheap communication does not affect consumer behavior, we demonstrate that persuasive communication may increase sales and profit. Finally, we establish that a firm can benefit from operational transparency if cost is monotone increasing in the quality of the production process.

Keywords: Reference-dependent preferences, fairness, pricing, cost communication, operational transparency

JEL Classification: D9, L11, L21, M31

Suggested Citation

Bertini, Marco and Buehler, Stefan and Halbheer, Daniel, Consumer Resistance (June 22, 2018). HEC Paris Research Paper No. MKG-2018-1251, Available at SSRN: https://ssrn.com/abstract=3120448 or http://dx.doi.org/10.2139/ssrn.3120448

Marco Bertini

ESADE - Ramon Llull University ( email )

Avinguda de la Torre Blanca, 59
Sant Cugat del Vall├Ęs, 08172
Spain

Stefan Buehler

University of St. Gallen - SEPS: Economics and Political Sciences ( email )

FGN-HSG
Varnbuelstr. 19
CH-9000 St. Gallen
Switzerland
+41-71-224-2303 (Phone)

Daniel Halbheer (Contact Author)

HEC Paris - Marketing ( email )

Paris
France

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