%0 Journal Article
%T Tariff-Specific Preferences and Their Influence on Price Sensitivity
%A Agnieszka Wolk
%A Bernd Skiera
%J BuR : Business Research
%D 2010
%I Verband der Hochschullehrer f¨šr Betriebswirtschaft e.V.
%X For many services, consumers can choose among a range of optional tariffs that differ in their access and usage prices. Recent studies indicate that tariff-specific preferences may lead consumers to choose a tariff that does not minimize their expected billing rate. This study analyzes how tariff-specific preferences influence the responsiveness of consumersĄ¯ usage and tariff choice to changes in price. We show that consumer heterogeneity in tariff-specific preferences leads to heterogeneity in their sensitivity to price changes. Specifically, consumers with tariff-specific preferences are less sensitive to price increases of their preferred tariff than other consumers. Our results provide an additional reason why firms should offer multiple tariffs rather than a uniform nonlinear pricing plan to extract maximum consumer surplus.
%K flat rate
%K flat-rate bias
%K nonlinear pricing
%K pay-per-use bias
%K price elasticity
%K pricing
%K tariff choice
%K tariff-specific preferences
%K three-part tariffs
%U http://www.business-research.org/2010/1/marketing/2507/hihrig1274352505.87.pdf