Willingness_to_pay

Willingness to pay

Willingness to pay

Maximum price at or below which a consumer will buy one unit of a product

For willingness to pay to avoid an undesirable feature, see Willingness to accept.

In behavioral economics, willingness to pay (WTP) is the maximum price at or below which a consumer will definitely buy one unit of a product.[1] This corresponds to the standard economic view of a consumer reservation price. Some researchers, however, conceptualize WTP as a range.

According to the constructed preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store.

See also

References

  1. [1]
    Varian, Hal R. (1992), Microeconomic Analysis, Vol. 3. New York: W.W. Norton.

Further reading


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