The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation |
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Institution: | 1. Department of Psychiatry, Faculty of Medicine, University of Toronto, Toronto, ON, Canada;2. Institute for Mental Health Policy Research, Centre for Addiction and Mental Health, Toronto, ON, Canada;3. Center for Public Policy Studies in Human Rights (NEPP-DH/UFRJ), Rio de Janeiro, Brazil;4. Department of Epidemiology and Quantitative Methods in Health, Oswaldo Cruz Foundation, Rio de Janeiro, Brazil;5. Department of Medicine, University of California San Diego School of Medicine, La Jolla, CA, United States |
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Abstract: | Previous literature has shown that potential buyers use a reference price or product to form their opinion about the value of a new product. Therefore, the pricing decision is an interactive process. We investigate the two generalizations of the cross-price effect (the neighborhood price effect and the asymmetric price effect) on consumer willingness-to-pay (WTP) for multiple similar products in an open-ended contingent valuation context. Results show that the cross-price effect on WTP is prominent, with the neighborhood price effect holding in contingent valuation. No conclusions are reached about the asymmetric price effect. |
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Keywords: | Contingent valuation Cross-price effect Orange juice Reference price Willingness to pay |
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