Entry-Level Products with Consumer Learning
AbstractDynamic motivations for the use of product line extensions in the form of entry-level products are considered. When consumers are uncertain of their valuations for products, and their purchasing power evolves over time, firms competing in a lucrative luxury market may try to influence the future buying decisions of young consumers. Offering entry-level products allows young consumers to experiment and thereby make better future decisions. Despite this efficiency, so providing information to consumers need not benefit a firm. The dynamic motivations for offensive product introductions differ discretely from defensive introductions.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.
Volume (Year): 4 (2005)
Issue (Month): 1 (September)
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Web page: http://www.degruyter.com
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- Justin P. Johnson & David P. Myatt, 2006.
"On the Simple Economics of Advertising, Marketing, and Product Design,"
American Economic Review,
American Economic Association, vol. 96(3), pages 756-784, June.
- David P. Myatt & Justin P. Johnson, 2004. "On the Simple Economics of Advertising, Marketing, and Product Design," Economics Series Working Papers 185, University of Oxford, Department of Economics.
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