Is cost transparency necessarily good for consumers

Kuah, Adrian T.H., and Weerakkody, Vishanth (2015) Is cost transparency necessarily good for consumers. European Journal of Marketing, 49 (11/12). pp. 1980-1986.

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Abstract

Purpose – The purpose of this paper is to present a critical viewpoint on the negative aspects of market, price and cost transparencies to consumers in terms of its costs.

Design/methodology/approach – It adopts an inter-disciplinary approach from the marketing, economics and accounting literature. The paper explores market transparency in the ever-changing world and uses brand names like Starbucks and iPhone to illuminate instances where imperfect markets are supported by consumers.

Findings – Recognizing the role that the Internet plays in promoting price transparency, it espouses how extant information can add costs and risks to the consumer's value judgement. Finally, the paper advocates that arbitrary judgements existing in cost accounting make it difficult to compare unit cost. This could result in consumers paying extra money to benefit from cost transparency.

Practical implications – This paper argues that three main issues may arise in providing unit cost to the consumers. First, transparency entails built-in costs, whether they are in taxes or product prices. Second, in accounting, unit cost information is currently not equitable between businesses. Finally, the paper argues that extra time and effort in making sense of unit cost information lead to questions about the viability of transparent costing.

Originality/value – The arguments for transparency have been widely discussed, supported and promoted by many. While negative aspects are known to businesses, few consider the consumer's perspective. By amalgamating evidence and arguments from different disciplines, this paper lends value, providing a critical perspective where transparent unit cost revelation can be more costly and less viable than what is assumed.

Item ID: 39886
Item Type: Article (Refereed Research - C1)
Keywords: transparency, unit cost, perceived value, consumer behaviour
ISSN: 1758-7123
Date Deposited: 19 Aug 2015 02:59
FoR Codes: 15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1505 Marketing > 150599 Marketing not elsewhere classified @ 60%
15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1503 Business and Management > 150399 Business and Management not elsewhere classified @ 40%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9104 Management and Productivity > 910403 Marketing @ 60%
91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910204 Industry Costs and Structure @ 40%
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