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The success and expansion of the International Comparison Program (ICP) has led to an increase in interest and effort on the estimation of sub-national price levels and purchasing power parities (PPPs). The ICP highlighted a difficulty that large countries such as Brazil, Russia, India and China face during the price-collection phase, namely how to obtain average prices when there are large disparities in many types of expenditure categories, such as housing prices between rural and urban settings. The fact that such disparities were in evidence led to more research on within-country PPPs, or regional price parities (RPPs). The difference between a RPP and the PPPs is simply that the former are in the same currency, while PPPs are usually converted to a reference country or currency by the exchange rate, such as the United States Dollar or the Euro. This paper describes the methodology used to estimate the RPPs within the United States, and shows their effect on measures of income adjusted to constant dollars, termed real regional incomes.

Does explicit recall help or hurt memory-based comparisons? It is often assumed that attempting to recall information from memory should facilitate—or at least not disrupt—memory-based comparisons. Using the domain of price comparisons, the authors demonstrate that memory-based price comparisons are less accurate when consumers first attempt to recall the past price versus when they do not try to do so. Attempting—and failing at—explicit price recall focuses attention on metacognitive experience, resulting in a feeling-of-notknowing, which then blocks the implicit memory that people could otherwise use to make accurate price comparisons. Drawing attention to this metacognitive feeling-of-not-knowing increases the blocking effect of recall on implicit memory, whereas drawing attention away from the feeling reduces the blocking effect. The results identify a new type of memory blocking—metacognitive memory blocking—in which the feeling-of-not-knowing blocks implicit memory during judgments. They also provide further evidence of dual representations of price memory and demonstrate that most memory-based price comparisons are based on implicit memory and do not entail explicit recall of the reference price.

Prior research suggests that partially comparative pricing—in which a retailer provides price comparisons for some, but not all, of its products—is a double-edged sword. On the one hand, such pricing improves beliefs about the retailer's competitive price advantage on comparatively priced products for which its prices are compared with a competitor. On the other hand, it has been shown to damage perceptions of the retailer's noncomparatively priced products relative to those charged by the competition. However, this latter outcome is based on evidence examining the influence of partially comparative pricing across different product categories. The authors propose and demonstrate in five studies that price comparisons may actually improve relative price beliefs about the noncomparatively priced brands within the same product category. They further show this improvement to be attenuated as the number of price comparisons increase or when the price comparison is attached to a brand perceived as less typical of the product category. The authors conclude by drawing managerial implications and offer suggestions for further research.

The Internet has radically reduced the cost of collecting and distributing information. Consequently, researchers initially predicted that the resulting price transparency would drive prices toward a single market price. However, this has largely not happened, partly because retailers use shipping costs to make prices less comparable. Using data on 517,048 offers of 895 retailers from a leading European price comparison site, we show that retailers pursue two different shipping cost strategies. Both strategies lead to higher gross product prices, which are the sum of net product price and shipping costs and thus try to capture consumer surplus. These strategies are conflicting, however, and target different consumer segments: Some retailers charge high shipping costs and thereby try to exploit consumers' biased perceptions of partitioned prices, while other retailers offer \"free shipping\" to attract consumers and exploit their so-called zero-risk bias. Consumers realize the lowest gross product prices by ordering at retailers that charge moderate shipping costs.

This article studies market competition when firms can influence consumers' ability to compare market alternatives through their choice of price \"formats.\" In our model, the ability of a consumer to make a comparison depends on the firms' format choices. Our main results concern the interaction between firms' equilibrium price and format decisions and its implications for industry profits and consumer switching rates. In particular, market forces drive down the firms' profits to a \"constrained competitive\" benchmark if and only if the comparability structure satisfies a property that we interpret as a form of \"frame neutrality.\" The same property is necessary for equilibrium behavior to display statistical independence between price and format decisions. We also show that narrow regulatory interventions that aim to facilitate comparisons may have an anticompetitive effect.

This research investigates the effects of across-consumer price comparisons on perceived price fairness as a function of culture. Collectivist (Chinese) consumers are more sensitive to in-group versus out-group differences than individualist (U.S.) consumers. The collectivist perspective orients consumers toward the in-group and heightens concerns about \"face\" (i.e., status earned in a social network) that arise from in-group comparisons. Process evidence for the causal role of cultural differences derives from manipulated self-construal and measurement of the emotional role of shame evoked by face concerns. Finally, in a robustness test, an alternative operationalization of the in-group/out-group distinction extends the findings to the context of firm relationships.

Consistent real income comparisons over time and space are critical for studies on catch-up and convergence. The paper provides an analytical framework for making real income comparisons across countries and over time that satisfy transitivity and at the same time reflect an underlying nonhomothetic utility function for a representative consumer. The concept of reference price comparisons is developed and implemented using nonhomothetic translog and almost ideal demand systems. The paper discusses a direct approach, which uses all the parameters of the demand system to make real income comparisons, and an indirect approach, which adjusts the national price-based comparisons using reduced information only on income elasticities of demand. The proposed approach is empirically implemented using data from the 1980 and 1996 benchmark data from the International Comparison Program, and the empirical results confirm the analytical results discussed in the paper.

•Online price comparison sites affect price evaluations and online retailer choice.•Retailer ratings and price distributions independently influence price evaluations.•The distribution effect disappears when ratings of the dominant price are low.•Price validity, but not retailer quality, emerges as the mediator of this effect.•Ratings effect on online retailer choice is stronger for high-priced retailers. Consumers increasingly rely on Internet price comparison sites (PCS) to gain knowledge about the market. The prices generated by a PCS search can act as contextual reference prices and influence the attractiveness of prices encountered later as consumers shop offline at local stores. This paper demonstrates that both PCS retailer ratings and the shape of the PCS price distribution influence the impact of PCS search results on later price evaluations. A favorable PCS retailer rating increases the perceived validity of the price associated with that retailer, enhancing the impact of that PCS price on offline price evaluations (Study 1). The shape of the PCS price distribution can also influence later price evaluations, however this effect depends on the information provided by the PCS retailer ratings. When PCS retailer ratings are similar, implying similar validity for the associated prices, low PCS prices and those appearing more frequently in the PCS price distribution have more impact (Studies 2 and 3). When PCS retailer ratings are variable (some high and some low), the PCS price distribution effect occurs only when the PCS retailer ratings provide congruent information about price validity — that is, the most frequent price is offered by retailers with more favorable ratings. Study 3 shows that price validity inferences do mediate this result. Finally, we depart from the offline shopping context to show that when consumers choose a retailer directly from the PCS search results, the effect of PCS retailer ratings is stronger for high-priced retailers and for consumers who rely less on the retailer price as a heuristic to infer retailer service level. Based on our findings we offer insights for online and offline retailers when considering strategic responses, such as price matching guarantees.

Price-comparison engines allow customers to compare product offerings of online sellers and reveal almost complete information on the alternatives, and hence create erosion in store loyalty. Consequently,the competitive dynamics of online sales are affected in markets where price-comparison shopping is diffusing rapidly. We develop a dynamic competitive pricing model that deals with an asymmetric duopolistic market where the segment sizes are determined through a diffusion process. Our diffusion-of-innovations approach allows us to dynamically capture the proportion of informed and uninformed customers in a homogenous goods market. We use this model to analyze how strategic profit-maximization behavior evolves over time. This analysis shows that the increasing numbers of price-comparison shoppers pull prices down, and the rate at which prices decrease is shaped by the diffusion curve and brand preference. Our analysis shows that stores with loyal customers, or with a preference for their brands, can attain higher profits further into the diffusion process. The direct implication is that firms should use their information technology, operations, and marketing capabilities to create, enhance, and cultivate stronger preferences for, and loyalty to, their brand names to survive the inevitable information-rich markets of tomorrow.

Background In Finland’s private health care markets, a lack of price transparency has made price shopping difficult for consumers in the past. To address this issue, two distinct online price comparison tools were introduced. Economic theory and empirical research suggest that increasing price transparency can lower prices, but the impact depends on market conditions and the design of price disclosure. This paper examines the effect of these two distinct price disclosures on the prices of private magnetic resonance imaging (MRI) in Finland. Methods We utilize comprehensive administrative data from the National Health Insurance of Finland, which include all reimbursed procedures and prices in the private sector from 2008 to 2017. We employ a difference-in-differences approach to estimate the causal effects of price disclosures. Additionally, we use a market concentration index to control for the ex ante level of competition and explore whether market concentration is associated with the price effects. Results We found that only the second price disclosure reduced MRI prices, with provider prices lowering by 5.2% and market prices by 10.6% relative to those of the control group. The effects varied across regions and time: the provider price effect became statistically insignificant after a year, whereas market prices reached a statistically significant reduction of 12% until the end of the study period. The effect was also stronger for concentrated markets, suggesting that price transparency inhibits companies’ ability to exert monopoly power. Conclusions The results align with those of previous studies, indicating that competition can be promoted through price transparency and that information disclosure is more effective when baseline market performance is low. As MRI services are highly standardized, it is unlikely that providers lower prices by compromising quality. However, a definitive conclusion on consumer welfare gains cannot be drawn. The different effects of the two price disclosures highlight the importance of design and market conditions in promoting competition and gaining savings. The first price disclosure failed, as it did not reveal the relevant price information sufficiently, and ex ante market conditions lowered the price sensitivity of both the consumers and providers.