Consumer sorting of vertically differentiated goods
AbstractThis paper shows the conditions for consumer sorting to be profitable. Sorting of low quality goods dampens their substitutability with high quality goods and can raise firm's profit even when sorting lowers profit from low quality sales considered alone.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 109 (2010)
Issue (Month): 1 (October)
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Web page: http://www.elsevier.com/locate/ecolet
Consumer sorting Adverse selection Vertical differentiation;
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Center for Agricultural and Rural Development (CARD) Publications
04-wp355, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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