Quality Conscious Customers Give Rise to Non-Decreasing Prices

Susanna Sallstrom

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: Uncertainty about a customer's reservation price for a good may be due to uncertainty about whether the customer values a costly attrbiute of the product or not. Depending on parameters, the seller will perform experiments in price and quality, or pure price or quality experiments. The price path if the seller experiments will be as follows: (i) constant or increasing if quality is constant; (ii) either sign if quality increases; (iii) decreasing if quality decreases.

Keywords: experiments; price and quality patterns (search for similar items in EconPapers)
JEL-codes: C72 D83 L15 (search for similar items in EconPapers)
Date: 1998-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9817

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