Synopsis: Pricing and Quality Control under Goodwill Loss, I

Clive Fraser ()

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: Exant theoretical studies of goodwill have, with one exception, explored the relationship between advertising and sales. We construct a simple model of the firm's pricing and quality control when it loses goodwill, hence future sales, should it produce defective commodities. Given a deterministic relationship between defectives and the future demand schedule, the impact of the firm's time preference and record of producing defectives upon its current pricing and quality control is examined, together with the conditions for the firm to be driven from the market. Risk is then introduced into the relationship between defectives produced and future goodwill loss and the consequences for price and quality of increased risk are examined.

Pages: 31 pages
Date: 1981
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https://warwick.ac.uk/fac/soc/economics/research/w ... 78-1988/twerp193.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:193

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