Price transparency in international retailing on digital platforms

Abstract

Purpose

In the digital era, price transparency—the practice of disclosing cost breakdowns in product manufacturing—has become present on digital platforms. Although its benefits are well-documented and consumers should theoretically desire costless and relevant information for informed decision-making, this paper proposes that consumers may resist overly transparent pricing, particularly when it pertains to premium-priced (vs regular-priced) products from countries with high equity.

Design/methodology/approach

Our research comprises three experimental studies utilizing both student and representative online Prolific samples, covering various products and countries with different equity levels. Initially, a pilot study identifies an interpersonal should-want conflict induced by price transparency when purchasing premium-priced products, leading to information avoidance. Subsequent studies further explore this phenomenon by examining the moderating role of country equity and the mediating role of price unfairness perceptions.

Findings

Price transparency can backfire when purchasing premium-priced products due to the want-should conflict among consumers—the desire to receive disclosure of cost breakdowns versus the inclination not to view it. This conflict results in increased resistance to receiving transparent price information and decreased brand attitudes and purchase intentions, especially for products originating from high-equity countries. Heightened perceptions of price unfairness explain these dynamics.

Research limitations/implications

The study primarily relies on experimental designs with limited sample sizes. To enhance the generalizability of the findings, incorporating large-scale real market data across diverse domains and countries would be beneficial.

Originality/value

Grounded in the should-want conflict and information avoidance theories, this paper uniquely explores the adverse effects of price transparency on digital platforms. We extend this by demonstrating that this conflict is influenced by country equity, where the perceived value added by the association of a product with a given country name affects whether consumers experience the conflict. Our investigation of perceived price unfairness further deepens our understanding of the nuanced effects of price transparency.

Citation

Kim, K., Ryoo, Y., Zdravkovic, S. and Yoon, S. (2024), "Price transparency in international retailing on digital platforms", International Marketing Review, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IMR-12-2023-0352