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Complementarity between online and offline channels for quality signaling

Author

Listed:
  • Yijuan Chen

    (Australian National University)

  • Xiangting Hu

    (Harbin Institute of Technology)

  • Sanxi Li

    (Renmin University of China
    Renmin University of China)

Abstract

In contrast to offline consumers, online consumers cannot physically inspect a product before purchase, and thus may remain uncertain about the product quality. We show that building a physical shop can generate an informed offline consumer base, which may allow the firm to reveal its product quality to online buyers through optimal pricing. Our results imply that, to resolve consumers’ uncertainty regarding product quality, a firm does not need to completely cover the market by building numerous physical stores; a small number of physical shops may be sufficient to address such pre-purchase uncertainty.

Suggested Citation

  • Yijuan Chen & Xiangting Hu & Sanxi Li, 2022. "Complementarity between online and offline channels for quality signaling," Journal of Economics, Springer, vol. 135(1), pages 49-74, January.
    • Handle: RePEc:kap:jeczfn:v:135:y:2022:i:1:d:10.1007_s00712-021-00755-7
    DOI: 10.1007/s00712-021-00755-7
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    References listed on IDEAS

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    More about this item

    Keywords

    Online and offline channels; Product quality signaling; Social learning;
    All these keywords.

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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