American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Competition and the Use of Foggy Pricing
American Economic Journal: Microeconomics
vol. 5,
no. 1, February 2013
(pp. 194–216)
Abstract
Firms engage in foggy pricing when the menu of tariff options aims at profiting from consumer mistakes. The analysis of this paper concludes that the transition from monopoly to competition in the early US cellular telephone industry does not generally foster the use of such deceptive strategies. I offer three alternative measures to account for the fogginess of the menu of options offered by cellular carriers. All results are robust to the existence of uncertainty regarding future consumption at the time of choosing a particular tariff option, as well as to consumers' heterogeneity with respect to cellular telephone usage. (JEL D03, L11, L12, L13, L96)Citation
Miravete, Eugenio J. 2013. "Competition and the Use of Foggy Pricing." American Economic Journal: Microeconomics, 5 (1): 194–216. DOI: 10.1257/mic.5.1.194Additional Materials
JEL Classification
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L12 Monopoly; Monopolization Strategies
- L13 Oligopoly and Other Imperfect Markets
- L96 Telecommunications
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