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Why Are Some Products Branded and Others Not?

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  • Png, I P L
  • Reitman, David

Abstract

Why do some consumers pay a premium for branded products? According to the consumer information theory, brands signal the quality of experience goods (products whose quality cannot be determined on inspection) to consumers for whom personal search and testing is relatively costly. We find that the product and customer mix in a sample of branded and unbranded service stations is generally consistent with the theory. Branded dealers are more likely to carry products for which cheating on quality is an issue and to serve customers for whom personal search and testing is relatively costly. Copyright 1995 by the University of Chicago.

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  • Png, I P L & Reitman, David, 1995. "Why Are Some Products Branded and Others Not?," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 207-224, April.
    • Handle: RePEc:ucp:jlawec:v:38:y:1995:i:1:p:207-24
    DOI: 10.1086/467329
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    References listed on IDEAS

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    Cited by:

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    2. Roger Bate & Ginger Zhe Jin & Aparna Mathur, 2012. "Counterfeit or Substandard? Assessing Price and Non-Price Signals of Drug Quality," NBER Working Papers 18073, National Bureau of Economic Research, Inc.
    3. González-Benito, Óscar & Martos-Partal, Mercedes & San Martín, Sonia, 2015. "Brands as substitutes for the need for touch in online shopping," Journal of Retailing and Consumer Services, Elsevier, vol. 27(C), pages 121-125.
    4. Alessandro Stanziani, 2004. "Wine Reputation and Quality Controls: The Origin of the AOCs in 19th Century France," European Journal of Law and Economics, Springer, vol. 18(2), pages 149-167, September.
    5. Borghesani, William H. & de la Cruz, Peter L. & Berry, David B., 1997. "Controlling the chain: buyer power, distributive control, and new dynamics in retailing," Business Horizons, Elsevier, vol. 40(4), pages 17-24.
    6. Chu, Junhong & Arce-Urriza, Marta & Cebollada-Calvo, José-Javier & Chintagunta, Pradeep K., 2010. "An Empirical Analysis of Shopping Behavior Across Online and Offline Channels for Grocery Products: The Moderating Effects of Household and Product Characteristics," Journal of Interactive Marketing, Elsevier, vol. 24(4), pages 251-268.
    7. Anderson, Kelley Cours & Laverie, Debra A., 2022. "In the consumers’ eye: A mixed-method approach to understanding how VR-Content influences unbranded product quality perceptions," Journal of Retailing and Consumer Services, Elsevier, vol. 67(C).
    8. Emek Basker & Lucia Foster & Shawn Klimek, 2017. "Customer‐employee substitution: Evidence from gasoline stations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 876-896, December.
    9. Lesley Chiou & Catherine Tucker, 2012. "How Does the Use of Trademarks by Third-Party Sellers Affect Online Search?," Marketing Science, INFORMS, vol. 31(5), pages 819-837, September.
    10. Giovanni B. Ramello, 2006. "What'S In A Sign ? Trademark Law And Economic Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 20(4), pages 547-565, September.
    11. Juan Delgado & Michael Waterson, 2003. "Tyre price dispersion across retail outlets in the UK," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 491-509, December.
    12. Paul H. Jensen & Elizabeth Webster, 2006. "Market Power, Brand Characteristics and Demand for Retail Grocery Products," Melbourne Institute Working Paper Series wp2006n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    13. Ganesh Iyer & P.B. Seetharaman, 2003. "To Price Discriminate or Not: Product Choice and the Selection Bias Problem," Quantitative Marketing and Economics (QME), Springer, vol. 1(2), pages 155-178, June.
    14. Duke, Richard D. & Jacobson, Arne & Kammen, Daniel M., 2002. "Photovoltaic module quality in the Kenyan solar home systems market," Energy Policy, Elsevier, vol. 30(6), pages 477-499, May.
    15. Dutton, Jennifer M. & Ward, Clement E. & Lusk, Jayson L., 2007. "Implicit Value of Retail Beef Brands and Retail Meat Product Attributes," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37571, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    16. Zenger, Hans, 2012. "The marginal price effects of antitrust rules against price discrimination," Economics Letters, Elsevier, vol. 117(3), pages 921-923.
    17. Régibeau, P & Rockett, K, 2004. "The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach," Economics Discussion Papers 2851, University of Essex, Department of Economics.

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