This study investigates the impact of participatory pricing mechanisms, specifically pay-what-you-want (PWYW) and set-your-own-price (SYOP), on household food expenditure and affordability in India. This study aims to understand how these pricing models affect consumer behavior across various food categories and income groups in both urban and rural settings.
Using data from the NSSO 2022–23 Consumption Expenditure Survey (CES), this study uses log-level ordinary least squares regressions, generalized linear models with a log link and logistic regressions. These models incorporate interactions between pricing scenarios (for PWYW, as well as SYOP quintiles) and income groups (measured by monthly per capita expenditure quintiles). A comprehensive set of control variables at the household level was included to ensure robust estimates.
The results indicate that PWYW pricing leads to nonlinear changes in food expenditure. Urban households exhibit elastic responses, with higher-income groups reallocating their spending more significantly in response to discounts, whereas rural households display inelastic behavior under similar pricing conditions. Under the SYOP model, lower-income households face severe affordability constraints, whereas higher-income consumers demonstrate increased spending on nutrient-dense foods. These heterogeneous responses suggest that price flexibility alone may not uniformly improve food affordability and nutritional adequacy across different socio-economic contexts.
This research extends the existing literature on pricing strategies by applying participative pricing models to food expenditure and nutritional adequacy in a developing country context. The study offers actionable insights for policymakers and industry stakeholders, underscoring the need for targeted interventions that integrate flexible pricing with complementary social and economic support measures.
