PRICE STICKINESS AND CUSTOMER ANTAGONISM
Name
Anderson-2010-PRICE STICKINESS AND CUSTOMER ANTAGONISM.pdf
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194.59 KB
Format
Adobe PDF
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c88fc107af9285e7cd0009523f8874b8
Author(s)
Simester, Duncan
Anderson, Eric T.
Date Issued
May 2010
Journal
Quarterly Journal of Economics
Publisher
MIT Press
Citation
Anderson, Eric T., and Duncan I. Simester. “Price Stickiness and Customer Antagonism*.” Quarterly Journal of Economics 125.2 (2010): 729-765. © 2010 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Version
Final published version
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.
MIT Department
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1162/qjec.2010.125.2.729
