Warranties, Performance, and the Resolution of Buyer-Seller Disputes
AbstractMany disputes between buyers and sellers concern product quality and whether a claim of poor product performance is covered by a warranty issued by the seller. We develop an analytical framework in which average product quality, buyer preferences, production and transaction costs, and the extent to which "true" quality can be observed by buyer and seller interact to determine warranties, product price, and the likelihood of disputes. Using this framework, we examine the impact of various types of dispute resolution mechanisms (DRM's) on these outcomes. We relate features of DRM's such as cost and accuracy, to prices, warranties, and allocative efficiency of the market in which disputes arise.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 14 (1983)
Issue (Month): 1 (Spring)
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- Steven Matthews & John Moore, 1985.
"Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening,"
661, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthews, Steven & Moore, John, 1987. "Monopoly Provision of Quality and Warranties: An Exploration in the Theory of Multidimensional Screening," Econometrica, Econometric Society, vol. 55(2), pages 441-67, March.
- Bruce I. Carlin & Simon Gervais, 2009. "Legal Protection in Retail Financial Markets," NBER Working Papers 14972, National Bureau of Economic Research, Inc.
- Murthy, D. N. P. & Solem, O. & Roren, T., 2004. "Product warranty logistics: Issues and challenges," European Journal of Operational Research, Elsevier, vol. 156(1), pages 110-126, July.
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