Hostname: page-component-8448b6f56d-m8qmq Total loading time: 0 Render date: 2024-04-23T21:10:35.124Z Has data issue: false hasContentIssue false
  • English
  • Français

Fairness of Pricing Decisions

Published online by Cambridge University Press:  23 January 2015

Kathryn Graddy  and
Diana C. Robertson
Get access Rights & Permissions [Opens in a new window]

Abstract:

Our research investigated pricing policies of fast-food restaurants in predominantly black neighborhoods. We argue that the lack of monitoring of franchisees’ pricing policies leads to higher prices. Results indicate that franchisees are significantly more likely than company-owned outlets to charge higher prices based on the proportion of blacks in a neighborhood. These price differences do not appear to be explained away by cost or competition factors. Our findings do not establish an intent to discriminate; nevertheless, we discuss the fairness of the pricing structure found.

Type
Articles
Information
Business Ethics Quarterly , Volume 9 , Issue 2 , April 1999 , pp. 225 - 243
Copyright
Copyright © Society for Business Ethics 1999

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alcaly, R. E., and Klevorik, A. K., 1971. “Food prices in relation to income levels in New York City.” The Journal of Business 44: 380–397.CrossRefGoogle Scholar
Ayres, I., 1991. “Fair driving: gender and race discrimination in retail car negotiations.” Harvard Law Review 104, no. 4: 817–872.CrossRefGoogle Scholar
Ayres, I., and Siegelman, P., 1995. “Race and gender discrimination in bargaining for a new car.” The American Economic Review 85, no. 3: 304–321.Google Scholar
Barron, J. M., and Umbeck, J. R., 1984. “The effects of different contractual arrangements: The case of retail gasoline markets.” Journal of Law and Economics 27, no. 2: 313–328.CrossRefGoogle Scholar
Becker, G., 1957. The economics of discrimination. Chicago: The University of Chicago Press.Google Scholar
Bresnahan, T., and Reiss, P., 1991. “Entry and competition in concentrated markets.” Journal of Political Economy 99, no. 5: 977–1009.CrossRefGoogle Scholar
Caplovitz, D., 1963. The poor pay more. New York: The Free Press.Google Scholar
Card, D., and Krueger, A. B., 1994. “Minimum wages and employment: A case study of the fast food industry in New Jersey and Pennsylvania.” The American Economic Review 84: 772–793.Google Scholar
Dees, J. G., 1992. “Principals, agents, and ethics.” In Ethics and agency theory: an introduction, ed. Bowie, N. E. and Freeman, R. E.New York: Oxford University Press. Pp. 25–58.Google Scholar
DeGeorge, R. T., 1992. “Agency theory and the ethics of agency.” In Ethics and agency theory: an introduction, ed. Bowie, N. E. and Freeman, R. E.New York: Oxford University Press. Pp. 59–72.Google Scholar
Delaney, J. T., and Sockell, D., 1992. “Do company ethics programs make a difference? An empirical analysis.” Journal of Business Ethics 11, no. 9: 719–727.CrossRefGoogle Scholar
Donaldson, T., 1994. “When integration fails.” Business Ethics Quarterly 4, no. 2: 157–169.CrossRefGoogle Scholar
Donaldson, T., and Dunfee, T. W., 1994. “Towards a unified conception of business ethics: Integrative social contracts theory.” Academy of Management Review 19, no. 2: 252–384.CrossRefGoogle Scholar
French, P. A., 1995. Corporate ethics. Fort Worth: Harcourt Brace and Company.Google Scholar
Goodman, C. S., 1968. “Do the poor pay more?” Journal of Marketing, January, pp. 18–24.CrossRefGoogle Scholar
Goodpaster, K. E., 1984. Ethics in management. Boston: Harvard Business School.Google Scholar
Graddy, K., 1995. “Testing for imperfect market competition at the Fulton fish market.” RAND Journal of Economics 26, no. 1: 75–92.CrossRefGoogle Scholar
Graddy, K., 1997. “Do fast-food chains price discriminate on the race and income characteristics of an area?” In press, Journal of Business and Economic Statistics.Google Scholar
Ihlanfeldt, K. and Young, M., 1994. “Intrametropolitan variation in wage rates : The case of Atlanta fast-food restaurant workers.” Review of Economics and Statistics 76, no. 3: 425–433.CrossRefGoogle Scholar
Kahneman, D.; Knetsch, J. L.; and Thaler, R., 1986. “Fairness and the assumptions of economics.” Journal of Business 59, no. 4: 285–300.CrossRefGoogle Scholar
Kaufmann, P. J., and Lafontaine, F., 1994. “Costs of control: The source of economic rents for McDonald’s franchisees.” Journal of Law and Economics 37: 417–449.CrossRefGoogle Scholar
Kunreuther, H., 1973. “Why the poor may pay more for food: theoretical and empirical evidence.” Journal of Business 46: 368–383.CrossRefGoogle Scholar
Laczniak, G. R., and Inderrieden, E. J., 1987. “The influence of stated organizational concern upon ethical decision making.” Journal of Business Ethics 6, no. 1: 297–307.CrossRefGoogle Scholar
Lafontaine, F., 1995. “A critical appraisal of data sources on franchising.” Journal of Marketing Channels 4, nos. 1/2: 5–25.CrossRefGoogle Scholar
Lafontaine, F., 1996. Pricing decisions in franchised chains: A look at the fast-food industry. Unpublished manuscript, University of Michigan Business School.CrossRefGoogle Scholar
Lavin, J. K., 1995. Evaluating the impact of minimum wages on employment: endogenous demand shocks in the fast-food industry. Unpublished manuscript, Stanford University.Google Scholar
Laufer, W. S., and Darnell, D. L., 1995. “Corporate compliance and the small firm.” White-Collar Crime Reporter 9, no. 9: 1–9.Google Scholar
Murphy, P., 1995. “Corporate ethics statements: Current state and future prospects.” Journal of Business Ethics 14, no. 9: 727–740.CrossRefGoogle Scholar
Musgrove, P., and Galindo, O., 1988. “Do the poor pay more? Retail food prices in northeast Brazil.” Economic Development and Cultural Change, pp. 91–109.CrossRefGoogle Scholar
Rawls, J., 1971. A theory of justice. Cambridge: Harvard University Press.CrossRefGoogle Scholar
Robertson, D. C., 1993. “Empiricism in business ethics: Suggested research directions.” Journal of Business Ethics 12, no. 8: 585–599.CrossRefGoogle Scholar
Robertson, D. C., and Anderson, E., 1993. “Control system and task environment effects on ethical judgment: An exploratory study of industrial salespeople.” Organization Science 4, no. 4: 617–644.CrossRefGoogle Scholar
Rubin, P. H., 1978. “The theory of the firm and the structure of the franchise contract.” Journal of Law and Economics 21: 223–233.CrossRefGoogle Scholar
Sexton, D. E. Jr., 1971. “Comparing the cost of food to blacks and to whites—a survey.” Journal of Marketing, July, pp. 40–46.Google Scholar
Shepard, A., 1993. “Contractual form, retail price, and asset characteristics.” Rand Journal of Economics 24: 58–77.CrossRefGoogle Scholar
Smith, N. C., 1995. “Marketing strategies for the ethics era.” Sloan Management Review, Summer, pp. 85–95.Google Scholar
Stanworth, J., 1995. “The franchise relationship: Entrepreneurship or dependence?” Journal of Marketing Channels 4, nos. 1/2: 161–176.CrossRefGoogle Scholar
Sturdivant, F. D., 1968. “Better deal for ghetto shoppers.” Harvard Business Review, March-April, pp. 130–138.Google Scholar
Sturdivant, F. D., and Hanselman, W., 1971. “Discrimination in the marketplace: Another dimension.” Social Science Quarterly, December, pp. 625–630.Google Scholar
United States Bureau of Labor Statistics, 1969. Retail food prices in low and higher income areas. Washington, D.C.: Government Printing Office.Google Scholar
Weaver, G. R., 1993. “Corporate codes of ethics: Purpose, process and content issues.” Business and Society 32, no. 1: 44–58.CrossRefGoogle Scholar
Weaver, G. R. and Treviño, L., 1994. “Normative and empirical business ethics: separation, marriage of convenience or marriage of necessity?” Business Ethics Quarterly 4, no. 2: 129–143.CrossRefGoogle Scholar
Werhane, P. H., 1994. “The normative/descriptive distinction in methodologies of business ethics.” Business Ethics Quarterly 4, no. 2: 175–180.CrossRefGoogle Scholar
Wicks, A. C. and Freeman, R. E., 1997. “Organization studies and the new pragmatism: positivism, antipositivism and the search for ethics.” Organization Science, in press.Google Scholar
Williamson, O. E., 1989. “Transaction cost economics.” In Handbook of Industrial Organization, Volume I, ed. Schmalensee, R. and Willig, D.New York: Elsevier Science Publishers.Google Scholar
Zey-Ferrell, M., and Ferrell, O. C., 1982. “Role-set configuration and opportunity as predictors of unethical behavior in organizations.” Human Relations 37, no. 7: 587–604.CrossRefGoogle Scholar