EconPapers    
Economics at your fingertips  
 

Quality disclosure in the presence of strategic consumers

Ju Zhao, Ju Qiu, Yong-Wu Zhou, Xiao-Jian Hu and Ai-Feng Yang

Journal of Retailing and Consumer Services, 2020, vol. 55, issue C

Abstract: Consider a market for short-life products, such as smartphones, where a firm and consumers have asymmetric quality information, the firm sells products in two periods, and consumers make purchase decisions strategically. We investigate when a firm should disclose quality and the interaction between consumers' strategic behavior and the firm's disclosure behavior. We obtain several findings. First, regardless of whether consumers have low or high patience, the firm should disclose quality information if product quality is high and conceal it if product quality is low. However, for products with moderate quality levels, the firm will disclose more quality information to consumers with relatively high or low patience levels than when consumer patience is moderate. Second, firms will disclose less information when consumers behave strategically than when they are myopic. Third, when concealing quality information is an equilibrium, product prices are affected only by disclosure costs and independent of true product quality. Finally, the firm can benefit from consumers' strategic behavior and a higher disclosure cost, but greater patience might be detrimental to consumer surplus and social welfare.

Keywords: Quality disclosure; Strategic consumers; Belief update; Pricing (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0969698919313220
Full text for ScienceDirect subscribers only

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:eee:joreco:v:55:y:2020:i:c:s0969698919313220

DOI: 10.1016/j.jretconser.2020.102084

Access Statistics for this article

Journal of Retailing and Consumer Services is currently edited by Harry Timmermans

More articles in Journal of Retailing and Consumer Services from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-10-03
Handle: RePEc:eee:joreco:v:55:y:2020:i:c:s0969698919313220