Consumer sorting of vertically differentiated goods

Peyton Ferrier () and Qihong Liu ()

Economics Letters, 2010, vol. 109, issue 1, 11-13

Abstract: This paper shows the conditions for consumer sorting to be profitable. Sorting of low quality goods dampens their substitutability with high quality goods and can raise firm's profit even when sorting lowers profit from low quality sales considered alone.

Keywords: Consumer; sorting; Adverse; selection; Vertical; differentiation (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:109:y:2010:i:1:p:11-13

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