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Consumer sorting of vertically differentiated goods

Author

Listed:
  • Ferrier, Peyton
  • Liu, Qihong

Abstract

This 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.

Suggested Citation

  • Ferrier, Peyton & Liu, Qihong, 2010. "Consumer sorting of vertically differentiated goods," Economics Letters, Elsevier, vol. 109(1), pages 11-13, October.
  • Handle: RePEc:eee:ecolet:v:109:y:2010:i:1:p:11-13
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    References listed on IDEAS

    as
    1. Acharyya, Rajat, 2005. "Quality discrimination among income constrained consumers," Economics Letters, Elsevier, vol. 86(2), pages 245-251, February.
    2. Philippe Marcoul & John Lawrence, 2007. "Grader Bias in Cattle Markets? Evidence from Iowa," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 890-903.
    3. Chalfant, James A. & James, Jennifer S. & Lavoie, Nathalie & Sexton, Richard J., 1999. "Asymmetric Grading Error And Adverse Selection: Lemons In The California Prune Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(1), pages 1-23, July.
    4. Barzel, Yoram, 1977. "Some Fallacies in the Interpretation of Information Costs," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 291-307, October.
    5. Ferrier Peyton M, 2007. "Cherry Picking: Should Sellers Let Buyers Sort?," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(1), pages 1-32, December.
    6. Stivers, Andrew E., 2006. "Optimal number of standards under economies of scope in quality," Economics Letters, Elsevier, vol. 90(3), pages 368-372, March.
    7. Stivers, Andrew, 2003. "Quality standards with exogenously distributed quality," Economics Letters, Elsevier, vol. 80(1), pages 131-136, July.
    Full references (including those not matched with items on IDEAS)

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