Do consumers value price transparency?

Katja Seim (), Maria Ana Vitorino () and David M. Muir ()
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Katja Seim: University of Pennsylvania
Maria Ana Vitorino: University of Minnesota
David M. Muir: University of Delaware

Quantitative Marketing and Economics (QME), 2017, vol. 15, issue 4, No 1, 305-339

Abstract: 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% of the service price, and that consumer demographics drive heterogeneous preferences for transparency.

Keywords: Pricing; Transparency; Information; Consumer valuation (search for similar items in EconPapers)
JEL-codes: D43 D83 L13 L15 L84 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (6)

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DOI: 10.1007/s11129-017-9193-x

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