Quality, Shelf Life, and Demand Uncertainty
Zhang Anzhou (anzhouzhang@lnu.edu.cn)
Additional contact information
Zhang Anzhou: Li Anmin Institute of Economic Research, Faculty of Economics, Liaoning University, 66 Middle Chongshan Road, Shenyang, 110036, China
The B.E. Journal of Theoretical Economics, 2024, vol. 24, issue 1, 49-75
Abstract:
This paper studies a monopolist’s choices of quality and shelf life of a perishable good in the presence of demand uncertainty and sunk production cost. It shows that, in response to demand uncertainty, the firm typically produces multiple products which differ in quality and shelf life; under certain conditions, products with a longer shelf life are of lower quality; a probability distribution of demand which first-order (second-order) stochastically dominates another induces more (more or fewer) product varieties. It also provides conditions under which a higher quality product has a higher absolute profit margin but a lower percentage margin.
Keywords: demand uncertainty; perishable goods; product differentiation; product durability; shelf life (search for similar items in EconPapers)
JEL-codes: D21 L12 L23 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:
Downloads: (external link)
https://doi.org/10.1515/bejte-2023-0013 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejtec:v:24:y:2024:i:1:p:49-75:n:11
Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/bejte/html
DOI: 10.1515/bejte-2023-0013
Access Statistics for this article
The B.E. Journal of Theoretical Economics is currently edited by Burkhard C. Schipper
More articles in The B.E. Journal of Theoretical Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla (peter.golla@degruyter.com).