Thursday, June 27, 2013

Do Consumers Want Uniform Pricing?

The New York Times has an interesting article on JC Penney's pricing strategy.  Recently Penney's changed their pricing from price discounts to a more uniform pricing strategy.  It did not work, and one of the reason's why is that if customer's face a uniform price, they may be unable to tell if they are paying too much or too little for the good.  This is an interesting piece of information in the consumer's utility function and ultimately in their demand for the product that is (as far as I know) not something that has been theoretically fleshed out in economics.

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