ABSTRACT
The question of price fairness has become an important issue as criticisms of gasoline and prescription drug prices rise and the use of fees, “smart” vending machines, and the practice of dynamic pricing to enhance profitability become public knowledge (Ayres and Nalebuff 2003; Matanovich 2004; Thornton 2003). When Coca-Cola was considering installing smart vending machines, which would vary the price of a soft drink according to demand or the outside temperature, the resulting uproar was a public relations nightmare for the firm (Hays 1999). And Amazon.com did some back peddling when a customer discovered that the price of same-title DVDs differed across purchase occasions (Adamy 2000). More recently, the uproar of assessing fees (some hidden) as a mechanism of increasing revenues has led to cries of “unfair.” These examples indicate that both the price offered and the rationale for a given price may induce perceptions of price unfairness, further damaging the public’s perception of marketing.
