Price Stickiness and Customer Antagonism

Eric T. Anderson and Duncan I. Simester
Additional contact information
Eric T. Anderson: Northwestern University MIT.
Duncan I. Simester: Northwestern University MIT.

The Quarterly Journal of Economics, 2010, vol. 125, issue 2, pages 729-765

Abstract: Managers often state that they are reluctant to vary prices for fear of "antagonizing customers." However, there is no empirical evidence that antagonizing customers through price adjustments reduces demand or profits. We use a 28-month randomized field experiment involving over 50,000 customers to investigate how customers react if they buy a product and later observe the same retailer selling it for less. We find that customers react by making fewer subsequent purchases from the firm. The effect is largest among the firm's most valuable customers: those whose prior purchases were most recent and at the highest prices. (c) 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

Date: 2010
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdfplus/10.1162/qjec.2010.125.2.729 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:tpr:qjecon:v:125:y:2010:i:2:p:729-765

Ordering information: This journal article can be ordered from
http://mitpress.mit. ... me.tcl?issn=00335533

Access Statistics for this article

The Quarterly Journal of Economics is edited by Robert J. Barro, Edward L. Glaeser and Lawrence F. Katz

More articles in The Quarterly Journal of Economics from MIT Press
Series data maintained by Karie Kirkpatrick ().