Market Share Indicates Quality

Amir Ban and Nati Linial

Discussion Paper Series from The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem

Abstract: Market share and quality, or customer satisfaction, go hand in hand. Yet the inference that higher market share indicates higher quality is seldom made. The skepticism is in part fueled by elitism, the association of mass popularity with lower quality, and by cynicism, ascribing market leadership to an entrenched position. We find that though such skepticism is often justified, it is correct to make a Bayesian inference that the product with the higher market share has the better quality under rather tame assumptions.

Pages: 12 pages
Date: 2011-10
New Economics Papers: this item is included in nep-ind and nep-mkt
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Citations: View citations in EconPapers (1)

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