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High Price Strategy and Quality Signalling

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  • Atsuo Utaka

Abstract

type="main"> I investigate a high price strategy by a durable-goods producer for signalling the high quality of goods. It is assumed that two types of monopolists exist: high-quality and low-quality. The monopolist's type is assumed to be unknown to consumers in the first period. Before the beginning of the second period, a product reputation established in the past period enables consumers to recognize the real type of the monopolist. I show that there occurs a signalling equilibrium where the high-quality type monopolist uses a high price strategy. An interaction between the new and old products peculiar to the durable-goods markets plays an important role in the pricing strategy.

Suggested Citation

  • Atsuo Utaka, 2015. "High Price Strategy and Quality Signalling," The Japanese Economic Review, Japanese Economic Association, vol. 66(3), pages 408-420, September.
    • Handle: RePEc:bla:jecrev:v:66:y:2015:i:3:p:408-420
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    1. Atsuo Utaka, 2022. "Clearance sales and new product introduction," The Japanese Economic Review, Springer, vol. 73(3), pages 539-554, July.

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