The Price Is Unfair! a Conceptual Framework of Price Fairness Perceptions

Lan Xia, Kent B. Monroe, & Jennifer L. Cox

The Price Is Unfair! A Conceptual Framework of Price Fairness Perceptions
Recent news coverage on pricing portrays the importance of price fairness. This article conceptually integrates the theoretical foundations of fairness perceptions and summarizes empirical findings on price fairness. The authors identify research issues and gaps in existing knowledge on buyers’ perceptions of price fairness. The article concludes with guidelines for managerial practice.

he issue of price fairness has become newsworthy as concerns about gasoline prices, prescription drug prices, physicians’ retainer fees, smart vending machines, hidden fees and charges, or Amazon.com’s dynamic pricing test have become public knowledge. The uproar that occurred when an Amazon.com customer discovered that the price of same-title DVDs differed across purchase occasions was a public relations nightmare for the firm (Adamy 2000). This example shows that both the price offered and the rationale for offering a certain price may lead to perceptions of price unfairness. Perceptions of price unfairness may lead to negative consequences for the seller, including buyers leaving the exchange relationship, spreading negative information, or engaging in other behaviors that damage the seller (e.g., Campbell 1999). Why do consumers at times believe that they are being treated unfairly? Given increasing public concern, it seems appropriate to explore further the theoretical bases and empirical findings to clarify what is known about the causes of perceived price unfairness and how the perceptions influence customers’ behaviors. Various conceptualizations have been developed and adapted to explain the phenomenon of fairness. However, each approach tends to address a specific reason for price fairness. For example, the dual entitlement principle emphasizes the influence of supply and demand changes and the sellers’ profit orientation (Kahneman, Knetsch, and Thaler

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