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Pay What You Like

Jose Fernandez () and Babu Nahata ()

MPRA Paper from University Library of Munich, Germany

Abstract: We show that when a seller of a di¤erentiated good o¤ers the product allowing consumers an option to pay what they like, then all consumers will never free ride in equilibrium when their valuations of the good are positive, and, under certain conditions, all will consumers would pay. Further, for the seller this pricing could be more pro�table than uniform pricing. If consumers consider the social cost of free riding, or not paying a "fair" price, then our results show that consumers, rather than free riding, may not opt for this option. Instead, they prefer to purchase the good at the market price from a price-setting firm.

Keywords: pay-what-you-like pricing; self-selection; multidimensional screening; buffet pricing. (search for similar items in EconPapers)
JEL-codes: C72 D11 D21 D4 (search for similar items in EconPapers)
Date: 2009-04
New Economics Papers: this item is included in nep-mic and nep-mkt
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Citations: View citations in EconPapers (5) Track citations by RSS feed

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