Consumer inertia fosters product quality

Bartlomiej Wisnicki

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2022, vol. 96, issue C

Abstract: We analyze a market wherein consumers display inertia while having limited information about a product. We assume that consumers rely on anecdotal information during product assessment. Furthermore, they tend to overvalue and stick to their previous choice as long as it is satisfactory. We investigate the impact of inertia on market equilibrium. Although inertia raises firms’ monopoly power, it also creates incentives for quality increase and may enhance consumer and market welfare.

Keywords: Consumer inertia; Anecdotal reasoning; Bounded rationality; Price competition (search for similar items in EconPapers)
JEL-codes: D03 D11 L13 L15 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:96:y:2022:i:c:s2214804321001579

DOI: 10.1016/j.socec.2021.101817

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