Joint Product Signals of Product Quality
In the absence of other information about the quality of an experience good, the price of a jointly produced search good provides consumers with a signal of the former good’s quality.. This hypothesis provides an explanation for the heretofore unexplained pricing policies found in Barron’s and Umbeck’s (1984) empirical investigation of gasoline retailing.
|Date of creation:||Jan 1991|
|Date of revision:||Apr 1991|
|Publication status:||Published in Atlantic Economic Journal 19 no. 4 (1991): 38-41.|
|Contact details of provider:|| Postal: Muncie, Indiana 47306|
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- Paul R. Milgrom & John Roberts, 1984.
"Price and Advertising Signals of Product Quality,"
Cowles Foundation Discussion Papers
709, Cowles Foundation for Research in Economics, Yale University.
- Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
- Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-54, July/Aug..
- Barron, John M & Umbeck, John R, 1984. "The Effects of Different Contractual Arrangements: The Case of Retail Gasoline Markets," Journal of Law and Economics, University of Chicago Press, vol. 27(2), pages 313-28, October.
- Frank, Robert H, 1985. "The Demand for Unobservable and Other Nonpositional Goods," American Economic Review, American Economic Association, vol. 75(1), pages 101-16, March.
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