Price Signals Quality. The Case of One-Sided Asymmetric Information

Tore Ellingsen

No 60, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: The paper considers the pricing decision by a seller who has private information about quality. It is shown that, contrary to widespread belief, high quality products may be sold with positive probability even when buyers have no private information. The separating equilibria have a very simple structure.

Keywords: Pricing; signalling; product quality; separating equilibrium (search for similar items in EconPapers)
JEL-codes: D82 L15 (search for similar items in EconPapers)
Pages: 14 pages
Date: 1995-07
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Published in International Journal of Industrial Organization, 1997, pages 43-61.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0060

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