Quality Indicators: in Theory and in Fact
AbstractIn recent literature, it has been suggested that consumers need have no knowledge of product quality as a number of quality indicators (or signals) may be used as substitutes. Very little attention has been paid to the empirical verification of these studies. The present paper is devoted to the issue of how well these indicators perform, using market data provided by consumer magazines from three countries. The results strongly indicate that price is a poor quality indicator. The paper also presents some evidence that suggests that seller reputation and easily observable characteristics are also poor indicators.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 88-08.
Length: 32 pages
Date of creation: Jun 1988
Date of revision:
Publication status: Published in: European Economic Review, 1991, 35(8) pp 1491-1505
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marketing and advertising; consumer; U.S.; Denmark; Germany;
Find related papers by JEL classification:
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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