Price And Quality In A New Product Monopoly
AbstractIn a single-extraction model of consumer behavior, higher prices signal higher-quality products for a new product monopoly, even without cost asymmetries across different qualities. Moreover, higher-quality products earn greater expected profits and the monopolist has an incentive to produce even transient improvements in quality. Finally, the monopolist has a positive incentive to conduct market research about quality and produces more information than is socially optimal. Copyright 1994 by The Review of Economic Studies Limited.
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Bibliographic InfoPaper provided by Hoover Institution, Stanford University in its series Working Papers with number e-89-8.
Length: 28 pages
Date of creation: 1989
Date of revision:
quality standards ; information ; monopolies ; prices;
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