Public utility services have been plagued with problems of low tariff and low willingness-to-pay by consumers. In many countries, tariff setting has been a political decision with governments reluctant to antagonise the electorate. Low pricing leads to inadequate revenue streams and further deterioration in service levels which in turn aggravates the revenue collection problem. Even with the already low tariffs, many consumers are not willing to pay the charges. / Maintaining tariffs at a low level sets a low reference price in the minds of consumers further dampening their willingness-to-pay. Low tariffs also create a perception that public service provision is not a serious problem which can be solved rather easily and relatively cheaply. This perception has a negative effect on consumers when tariffs are raised resulting in them resisting upward tariff revisions. This research project seeks to model consumer willingness-to-pay behavioural intentions by identifying the factors that affect their perception of price and service. The objective of this model is to enable service providers to recognise these factors and plan their strategies to focus on positively influencing them. By such strategic planning and action, service providers and governments could attempt to change the perception of consumers and increase their willingness-to pay a fair price for public goods. / Setting prices for public goods using contingent valuation and willingness-to-pay surveys have little practical use as they inevitably result in low prices due to strategic manipulation and bias by respondents. There has been very little research focussed on modelling such behavioural intentions for public goods. Due to this, a literature review on the psychological aspects of the pricing and willingness-to-purchase of private goods is thus conducted to develop the conceptual model for public goods. / The literature review indicated that the key factors affecting consumers' price perception were reference price, information and justification of pricing practices, and information on service provision and service performance. It is proposed that these key factors could also be applicable in price and service perception formation and in moderating reactions to current and future price increases of public goods. / Several existing conceptual models for private and public goods were reviewed in developing the research model. Although none of them could be used fully, they formed the basis for formulating a new conceptual model and item development for the survey instrument. This conceptual model was built by defining the relationships of the key factors underpinning price and service perception and willingness-to-pay for public goods. / A field survey using a personally administered questionnaire on sewerage services was conducted. The data collected was used to validate the conceptual model using structural equation modelling (SEM). / The results indicate that reference price plays an important role in consumers' price perception of the public good. The consumer's reference price can be shifted by providing adequate justification of the price and disseminating information on service provision and performance. Greater emphasis is thus needed by service providers on communication strategies to justify prices and present service performance information in a manner readily understood by consumers. / Thesis (DBA(DoctorateofBusinessAdministration))--University of South Australia, 2006.
| Identifer | oai:union.ndltd.org:ADTP/267080 |
| Creators | Kunjamboo, Asairinachan. |
| Source Sets | Australiasian Digital Theses Program |
| Language | English |
| Detected Language | English |
| Rights | copyright under review |
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