Economics and marketing on pricing: how and why do they differ?

Abstract

PurposeThe purpose of this general review paper is to provide a comparison and evaluation of the treatment of pricing by the disciplines of economics and marketing.Design/methodology/approachIt is from three perspectives that the marketing and economics approaches to pricing are reviewed, namely, buyers' response to price, firm's determination of price, and industry‐ or economy‐wide role of price.FindingsA comparative review of the relevant marketing and economics literature shows that there are important differences between the two disciplines in their treatment of pricing. Marketing demonstrates a richer and more empirically based treatment of the pricing issue from the buyer's perspective, while economics is unchallenged from the economy‐wide perspective. The differences found between the marketing and economics approaches to pricing are mostly due to their different historical origins, primary concerns and doctrinal evolution. In contrast, interdisciplinary loans especially from behavioral science have made possible considerable advances in marketing, particularly in the understanding of the buyer's perspective.Originality/valuePrevious reviews of the pricing literature do not attempt to provide a direct comparison and evaluation and offer no explanation for the observed differences among the economics and the marketing disciplines regarding their treatment of the pricing issue. The value and originality of the current paper lies in the fact that it represents the first attempt to provide such a comparison and evaluation.