Human Vs Machine: How Does Production Mode Influence Consumers' Perception of Price Unfairness?

ABSTRACT Companies are under greater pressure than ever to charge higher prices to consumers, which could induce an increased perception of price unfairness. However, the role of production mode (handmade vs. machine‐made) in the formation of this negative perception remains unclear. In this research, we examine the relationship between production mode and consumers' perceptions of price unfairness when price increases. We analyze this relationship by testing the serial mediating roles of perceived cost controllability and profit inference and the moderating roles of communication of pricing justification and perceived corporate social responsibility (CSR). We observe that consumers perceive price increases of machine‐made products to be more unfair than those of handmade products because of the former's greater perceived cost controllability and greater profit inference. Furthermore, the effect of production mode on the perception of price unfairness is attenuated when firms actively reveal their reasons for price increases and disclose firms' socially responsible behavior.