Quality improvement through consumer sorting and disposal
Sorting allows consumers to capture the value of quality differences. As higher quality goods are removed, the value of the seller's remaining stock falls, lowering the price and profits. Bundling and other marketing mechanisms can discourage sorting and prevent the depreciation of the seller's stock. With comparative statics and simulations, the author shows that sellers can increase expected quality and profits by committing to discard a proportion of their resale stock after sorting occurs. In this manner, sorting acts similarly to agricultural grading. [EconLit Classification: Q1, Q11, Q13, L0, L1, D8, D82]. © 2009 Wiley Periodicals, Inc.
Volume (Year): 25 (2009)
Issue (Month): 4 ()
|Contact details of provider:|| Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Joseph E. Stiglitz, 2002.
"Information and the Change in the Paradigm in Economics,"
American Economic Review,
American Economic Association, vol. 92(3), pages 460-501, June.
- Stiglitz, Joseph E., 2001. "Information and the Change in the Paradigm in Economics," Nobel Prize in Economics documents 2001-8, Nobel Prize Committee.
- Peck, Joann & Childers, Terry L, 2003. " Individual Differences in Haptic Information Processing: The "Need for Touch" Scale," Journal of Consumer Research, University of Chicago Press, vol. 30(3), pages 430-42, December.
- 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.
- Stivers, Andrew E., 2006. "Optimal number of standards under economies of scope in quality," Economics Letters, Elsevier, vol. 90(3), pages 368-372, March.
- Leffler, Keith B & Rucker, Randal R, 1991. "Transactions Costs and the Efficient Organization of Production: A Study of Timber-Harvesting Contracts," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1060-87, October.
- Buzby, Jean C. & Wells, Hodan Farah & Axtman, Bruce & Mickey, Jana, 2009. "Supermarket Loss Estimates for Fresh Fruit, Vegetables, Meat, Poultry, and Seafood and Their Use in the ERS Loss-Adjusted Food Availability Data," Economic Information Bulletin 58313, United States Department of Agriculture, Economic Research Service.
- Borcherding, Thomas E & Silberberg, Eugene, 1978. "Shipping the Good Apples Out: The Alchian and Allen Theorem Reconsidered," Journal of Political Economy, University of Chicago Press, vol. 86(1), pages 131-38, February.
When requesting a correction, please mention this item's handle: RePEc:wly:agribz:v:25:y:2009:i:4:p:534-549. 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.