Pricing in Competitive Search Markets: The Roles of Price Information and Fairness Perceptions

Anbarcı, Nejat; Feltovich, Nick

doi:10.1287/mnsc.2016.2620

Cited by 15 publications

(16 citation statements)

References 33 publications

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“…Referring to Ordóñez et al. (2000), Li and Jain (2016), Lee and Fay (2017), and Anbarci and Feltovich (2018), for customers who obtain the regular price

p_{R}

(the discounted price

p_{R} - c

), we denote

r φ

(

- r φ

) as the utility gain (loss) that results from the platform's differential pricing.

r

is the fairness concerns of customers.…”

Section: The Modelmentioning

confidence: 99%

Differential pricing strategies of ride‐sharing platforms: choosing customers or drivers?

Zhao

Yuan

Chen

et al. 2021

Int Trans Operational Res

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Ride‐sharing platforms, such as Uber and Didi Chuxing, widely use differential pricing strategies to encourage platform participation. However, it remains unclear whether differential pricing strategies in ride sharing are reasonable when users care about price fairness. Moreover, platforms face a unique dilemma when considering differential pricing: should it be used for customers, drivers, or both? On the demand side, platforms must deal with taxi competition, while the supply side contends with government regulation; it is this dilemma that motivates our work. Using a stylized model that includes price fairness, market conditions, and government policies, we consider four ride‐sharing platform pricing strategies: uniform pricing, differential customer pricing, differential driver pricing, and bilateral differential pricing. We present results from three perspectives. For platforms, we obtain feasible regions in all four pricing strategies. If the maximal number of potential drivers is below certain thresholds, a platform will use differential driver pricing. Conversely, differential customer pricing is optimal when the maximal number of potential drivers is sufficiently large. Moreover, when customers have stronger fairness concerns, platforms tend to use differential driver pricing to reduce competition. From the government perspective, when a platform charges customers differently, the government can achieve a win‐win solution for sustainable development and market stability by setting a proper taxi rate. Interestingly, we find that, for the demand and supply sides, an increase in fairness concerns may hurt customers and drivers under certain conditions.

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“…Referring to Ordóñez et al. (2000), Li and Jain (2016), Lee and Fay (2017), and Anbarci and Feltovich (2018), for customers who obtain the regular price

p_{R}

(the discounted price

p_{R} - c

), we denote

r φ

(

- r φ

) as the utility gain (loss) that results from the platform's differential pricing.

r

is the fairness concerns of customers.…”

Section: The Modelmentioning

confidence: 99%

Differential pricing strategies of ride‐sharing platforms: choosing customers or drivers?

Zhao

Yuan

Chen

et al. 2021

Int Trans Operational Res

View full text Add to dashboard Cite

show abstract

“…Nie and Du (2017) investigate a dyadic supply chain involving a supplier and two JM2 16,2 retailers using quantity discount contracts. Other issues, such as the competitive search market (Anbarci and Feltovich, 2017) and behavior-based pricing (Li and Jain, 2015), also have been discussed by researchers.…”

Section: Literature Reviewmentioning

confidence: 99%

Effort exertion and contract design in collaborative product development with fairness concern

Xiao-ming

Gao

Chen

et al. 2020

JM2

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Purpose This study aims to model collaborative product development (CPD) among a focal firm (FF) and a fairness-concerned external partner (EP). The model is used to explore the impact of fairness concerns on revenue distributing contract and innovation efforts. The study also examines the role of follow-up sales in product development decisions. Design/methodology/approach A sequential game-theoretic model is developed to analyze product development decisions between the two parties, where participants exert innovation efforts to promote the product value and a revenue-sharing contract is used to distribute the revenue. Findings Fairness concern of EP has significant impacts on decisions. FF has incentives to change the contract in that fairness concerns might decrease his profit. Conditions and results change when the contract is endogenously decided. First, FF tends to develop the product independently. Second, FF may share a smaller revenue fraction with EP, as FF relies more on his own efforts during CPD. Third, FF cannot benefit from fairness concerns, as his profit is not higher than that in the benchmark. Finally, the existence of follow-up sales does not change FF’s decision about whether to collaborate with EP. Originality/value This study incorporates fairness preference into CPD decisions. Besides, a new concept of fairness called “effort-related fairness” is proposed.

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“…As a general rule, the creation of financial value is central to firms’ decision making, subject to different legal, social and environmental responsibilities pursuant of fair prices (Anbarci and Feltovich, 2017; Piron and Fernandez, 1995), sustainable development (Kim et al , 2017; Van Zanten and Van Tulder, 2018) and other objectives. When this is acknowledged along with a recognition that a firm constitutes a complex adaptive system (Bettis and Prahalad, 1995; Fowler, 2003), it can understand why endeavours to statistically relate a firm’s practices to performance may be inherently misguided and illusory (Jarzabkowski et al , 2016).…”

Section: Background: Understanding Value Creationmentioning

confidence: 99%

Creating value in firms at different management levels

Straten

2019

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Purpose Value is created for firms’ owners when profits outweigh investments over a given time period. This paper aims to distinguish where, within firms, strategic thinking is required for the purposes of creating value. Design/methodology/approach A novel framework is developed, which explains how six sources of value can be identified and logically related to six practical value management levels. Findings Importantly, only one source of value, namely, autonomous revenue growth, demands true strategic thinking because it represents an unknown outcome from the strategist’s perspective. This source of value can be tapped into at any decision-making level. Originality/value This paper clarifies and emphasises that demonstrating strategic wisdom is possible for anyone within a firm and ultimately, it resolves down to the thinking and decision making that increases the chances of generating higher, earlier and more frequent future incoming cash flows.

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Pricing in Competitive Search Markets: The Roles of Price Information and Fairness Perceptions

Cited by 15 publications

References 33 publications

Differential pricing strategies of ride‐sharing platforms: choosing customers or drivers?

Differential pricing strategies of ride‐sharing platforms: choosing customers or drivers?

Effort exertion and contract design in collaborative product development with fairness concern

Creating value in firms at different management levels

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