I suppose as a buyer many have been on the receiving end of "call for price" price discrimination or one of its less unpleasantly sounding synonyms. Now it's generally known that the average Joe hates negotiating at least for cars... So how do you decide as a seller whether to sell something the call-for-price-way or (still using cars as example) the Costco way i.e. with fixed/list prices?

I suppose there's some kind of market research that takes into account the psychological aversion [for protracted negotiation] of the prospective buyers, but I don't know much about that. Is there any research on this topic, i.e. what are the things to consider in deciding on list price vs "call for price"? And is there empirical validation for such decision schemes if they exist?

Yeah, the traditional economic theory simply says "If you can discriminate, it is profitable to do so". But that seems to ignore any behavioral economics aspects.

  • 2
    $\begingroup$ A note, because this only covers some scenarios: What you describe is sometimes just a matter of contract— certain suppliers, because they can't prevent retailers from selling their product below MSRP (as that would be an anticompetitive practice under US law), instead write contracts with retailers that prevent retailers from advertising a price below MSRP— but if a customer chooses to call and ask, they can of course be told the price. Also, for things like venues where pricing may change based on day of week, et cetera, the call for price method will be used. $\endgroup$ – dismalscience Nov 10 '15 at 13:13
  • $\begingroup$ Very interesting question. I would also be excited to see empirical evidence about this. Extending on @dismalscience last point: one case are probably exchange rate fluctuations for goods which are sold abroad. $\endgroup$ – HRSE Nov 11 '15 at 12:43

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.