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Causes and Consequences of Price Premiums


  • Rao, Akshay R
  • Monroe, Kent B


Existing literature that argues for the prevalence of price premiums is examined. An evaluation of an extant model identifies several possible boundary conditions that limit the applicability of the model. A set of propositions is developed based on these boundary conditions, linking buyer, seller, and market factors to the magnitude of price premiums that should be available. Alternative means for empirical testing of the propositions are offered, and some implications and applications of this line of thinking for pricing and brand management are described. Copyright 1996 by University of Chicago Press.

Suggested Citation

  • Rao, Akshay R & Monroe, Kent B, 1996. "Causes and Consequences of Price Premiums," The Journal of Business, University of Chicago Press, vol. 69(4), pages 511-535, October.
  • Handle: RePEc:ucp:jnlbus:v:69:y:1996:i:4:p:511-35

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    References listed on IDEAS

    1. Anonymous, 0. "Economic Development And Aid," Increasing Understanding of Public Problems and Policies, Farm Foundation.
    2. Anonymous & Dagher, Magid & Jones, Dewitt & Jones, Hezekiah & Samuel, Vin G., 0. "Outstanding Black Agricultural Economists," COSBAE Brochures, Agricultural and Applied Economics Association, Committee on the Opportunities and Status of Blacks in Agricultural Economics (COSBAE).
    3. Picard, Pierre, 1987. "On the design of incentive schemes under moral hazard and adverse selection," Journal of Public Economics, Elsevier, vol. 33(3), pages 305-331, August.
    4. Anonymous, 0. "Economic Growth Through Regional Associations," Increasing Understanding of Public Problems and Policies, Farm Foundation.
    5. Lynch, Michael & Miller, Ross M. & Plott, Charles R. & Porter, Russell., 1984. "Product Quality, Informational Efficiency and Regulations in Experimental Markets," Working Papers 518, California Institute of Technology, Division of the Humanities and Social Sciences.
    6. repec:tep:teppwp:wp1215 is not listed on IDEAS
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    1. repec:spr:infosf:v:11:y:2009:i:2:d:10.1007_s10796-008-9134-z is not listed on IDEAS
    2. Akshay R. Rao & Humaira Mahi, 2003. "The Price of Launching a New Product: Empirical Evidence on Factors Affecting the Relative Magnitude of Slotting Allowances," Marketing Science, INFORMS, vol. 22(2), pages 246-268, January.
    3. Proff, Heike & Proff, Harald V., 2000. "Preispremien-Management zur Sicherung von Differenzierungsstrategien - dargestellt am Beispiel der deutschen Automobilindustrie," Darmstadt Discussion Papers in Economics 102, Darmstadt University of Technology, Department of Law and Economics.
    4. Lan Luo & P. K. Kannan & Brian T. Ratchford, 2007. "New Product Development Under Channel Acceptance," Marketing Science, INFORMS, vol. 26(2), pages 149-163, 03-04.
    5. Christian Matt & Thomas Hess, 2016. "Product fit uncertainty and its effects on vendor choice: an experimental study," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(1), pages 83-93, February.
    6. Proff, Heike, 2000. "Hybrid strategies as a strategic challenge -- the case of the German automotive industry," Omega, Elsevier, vol. 28(5), pages 541-553, October.
    7. Hyun S. Shin & Dominique M. Hanssens & Kyoo il Kim, 2016. "The role of online buzz for leader versus challenger brands: the case of the MP3 player market," Electronic Commerce Research, Springer, vol. 16(4), pages 503-528, December.
    8. Eline Jongmans & Alain Jolibert & Julie Irwin, 2014. "Toujours plus, toujours mieux ? Effet contre-intuitif de l'évaluation des attributs environnementaux du produit par le consommateur," Post-Print halshs-01185784, HAL.

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