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Quality expectations, reputation, and price

Stuart Landon () and Constance Smith ()

MPRA Paper from University Library of Munich, Germany

Abstract: The impact on price of current product quality and reputation are estimated using data from the market for Bordeaux wine. A model is proposed in which price is a function of current quality and expected quality, where the latter depends on reputation. Equations determining price and expected quality are estimated jointly. The empirical findings show that the price premium associated with better individual and collective (or group) reputation far exceeds that associated with improvements in current quality. As well, the market values collective reputation indicators only to the extent that they are useful predictors of product quality.

Keywords: reputation; product quality, information; price (search for similar items in EconPapers)
JEL-codes: M3 D8 L15 (search for similar items in EconPapers)
Date: 1998
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Published in Southern Economic Journal 3.64(1998): pp. 628-647

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:9774

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