Online Pricing

Abstract

This chapter is fully devoted to pricing. After explaining the many price models available for online marketing, the author discusses the general area of dynamic pricing. The issue of fairness to consumers is explored with real cases and applications from different industries. Next is an explanation of reference price, the standard against which consumers evaluate a price. Stemming from a behavioral approach, this section of the chapter investigates how people form price expectations. The objective is also to study the evolution of reference prices from a firm’s perspective. Finally, there is an analysis on how to elicit reference prices from laboratory and field experiments, paying attention to internal and external validity.