The Price of Power: How Firm’s Market Power Affects Perceived Fairness of Price Increases

How does market power affect consumer perceptions and purchase behavior? In the theoretically and pragmatically important context of price increases, we theorize that (i) consumer price fairness perceptions decline with market power when a price increase is due to costs; and (ii) this fairness difference arises due to greater perceptions of controllability and, in turn, exploitation by firms with higher market power. Consistent with our...