IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v114y2002i1p83-10310.1023-a1021054001562.html
   My bibliography  Save this article

Uncertain Product Quality, Optimal Pricing and Product Development

Author

Listed:
  • Anthony Creane

Abstract

A firm is developing a new product. However, the firm is uncertain as to how consumers will perceive the product's desirability or quality. Using a general model of product quality, conditions for an increase in uncertainty to increase the optimal price are derived. General conditions are derived under which the firm prefers the less risky project, the one with lower quality variability. However, if at the optimal price the firm only has positive demand for high quality realizations, then the firm prefers a more risky project. As the uncertainty exists in the consumers' preferences, welfare effects can be determined, unlike in previous work examining uncertainty. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Anthony Creane, 2002. "Uncertain Product Quality, Optimal Pricing and Product Development," Annals of Operations Research, Springer, vol. 114(1), pages 83-103, August.
  • Handle: RePEc:spr:annopr:v:114:y:2002:i:1:p:83-103:10.1023/a:1021054001562
    DOI: 10.1023/A:1021054001562
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1023/A:1021054001562
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1023/A:1021054001562?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kimmo Berg & Harri Ehtamo, 2009. "Learning in nonlinear pricing with unknown utility functions," Annals of Operations Research, Springer, vol. 172(1), pages 375-392, November.
    2. Peng Du & Qiushuang Chen, 2017. "Skimming or penetration: optimal pricing of new fashion products in the presence of strategic consumers," Annals of Operations Research, Springer, vol. 257(1), pages 275-295, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:114:y:2002:i:1:p:83-103:10.1023/a:1021054001562. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.