Image concerns and the provision of quality
In this paper, I study markets where consumers are heterogeneous with respect to both their concerns for the quality of goods and the image associated with them. Consumers with a taste for quality lend a positive image to the product of their choice and thereby increase the product's value to others. A monopolist restricts the product portfolio and charges price premia to allocate image along with quality. Heterogeneity in image concerns thereby provides a rationale for pooling consumers with differing quality preferences. Although image is correlated with a product's quality in equilibrium, an increase in the value of image may decrease quality provision. In a competitive market, premium prices are unsustainable so that image-concerned consumers buy excessive quality instead. Monopoly may therefore yield higher welfare than competition. Policy options to remedy the efficiency losses are discussed.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Reichpietschufer 50, 10785 Berlin, Germany|
Phone: ++49 - 30 - 25491 - 0
Fax: ++49 - 30 - 25491 - 684
Web page: http://www.wzb.eu/
More information through EDIRC
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.:
- Jana Friedrichsen & Dirk Engelmann, 2013.
"Who Cares for Social Image? Interactions between Intrinsic Motivation and Social Image Concerns,"
CESifo Working Paper Series
4514, CESifo Group Munich.
- Friedrichsen, Jana & Engelmann, Dirk, 2013. "Who cares for social image? Interactions between intrinsic motivation and social image concerns," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79746, Verein für Socialpolitik / German Economic Association.
- Benabou, Roland & Tirole, Jean, 2005.
"Incentives and Prosocial Behavior,"
IZA Discussion Papers
1695, Institute for the Study of Labor (IZA).
- Bénabou, Roland & Tirole, Jean, 2004. "Incentives and Prosocial Behaviour," CEPR Discussion Papers 4633, C.E.P.R. Discussion Papers.
- Roland Bénabou & Jean Tirole, 2005. "Incentives and Prosocial Behavior," NBER Working Papers 11535, National Bureau of Economic Research, Inc.
- Bénabou, Roland & Tirole, Jean, 2003. "Incentives and Prosocial Behavior," IDEI Working Papers 389, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jan 2006.
- Roland Benabou & Jean Tirole, 2004. "Incentives and Prosocial Behavior," Working Papers 137, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics.
- Roland Bénabou & Jean Tirole, 2006. "Incentives and Prosocial Behavior," Post-Print hal-00173700, HAL.
- Ramon Casadesus-Masanell & Michael Crooke & Forest Reinhardt & Vishal Vasishth, 2009. "Households' Willingness to Pay for "Green" Goods: Evidence from Patagonia's Introduction of Organic Cotton Sportswear," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 203-233, 03.
- Bühler, Stefan & Halbheer, Daniel, 2011.
"Persuading Consumers With Social Attitudes,"
Economics Working Paper Series
1117, University of St. Gallen, School of Economics and Political Science.
- Friedrichsen, Jana, 2014.
"Image Concerns and the Provision of Quality,"
Annual Conference 2014 (Hamburg): Evidence-based Economic Policy
100365, Verein für Socialpolitik / German Economic Association.
- Glazer, Amihai & Konrad, Kai A, 1996. "A Signaling Explanation for Charity," American Economic Review, American Economic Association, vol. 86(4), pages 1019-28, September.
- Pastine, Ivan & Pastine, Tuvana, 2001.
"Consumption Externalities, Coordination and Advertising,"
CEPR Discussion Papers
2867, C.E.P.R. Discussion Papers.
- Ivan Pastine & Tuvana Pastine, 2002. "Comsumption Externalities, Coordination, and Advertising," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(3), pages 919-943, August.
- Bagwell, Laurie Simon & Bernheim, B Douglas, 1996. "Veblen Effects in a Theory of Conspicuous Consumption," American Economic Review, American Economic Association, vol. 86(3), pages 349-73, June.
- Wolfgang Pesendorfer, 1993.
"Design Innovation and Fashion Cycles,"
1049, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- David P. Baron, 2001. "Private Politics, Corporate Social Responsibility, and Integrated Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 7-45, 03.
- Kerwin Kofi Charles & Erik Hurst & Nikolai Roussanov, 2007.
"Conspicuous Consumption and Race,"
NBER Working Papers
13392, National Bureau of Economic Research, Inc.
- Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
- Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
- Ed Hopkins & Tatiana Kornienko, 2004.
"Running to Keep in the Same Place: Consumer Choice as a Game of Status,"
American Economic Review,
American Economic Association, vol. 94(4), pages 1085-1107, September.
- Ed Hopkins & Tatiana Kornienko, 2002. "Running to Keep in the Same Place: Consumer Choice as a Game of Status," ESE Discussion Papers 92, Edinburgh School of Economics, University of Edinburgh.
- Corneo, Giacomo & Jeanne, Olivier, 1997. "Conspicuous consumption, snobbism and conformism," Journal of Public Economics, Elsevier, vol. 66(1), pages 55-71, October.
- Armstrong, Mark & Rochet, Jean-Charles, 1999. "Multi-dimensional screening:: A user's guide," European Economic Review, Elsevier, vol. 43(4-6), pages 959-979, April.
- In-Koo Cho & David M. Kreps, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 102(2), pages 179-221.
- Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
- Rege, Mari, 2008. "Why do people care about social status?," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 233-242, May.
- Ireland, Norman J., 1994. "On limiting the market for status signals," Journal of Public Economics, Elsevier, vol. 53(1), pages 91-110, January.
- Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
- Nick Vikander, 2011. "Targeted Advertising and Social Status," Tinbergen Institute Discussion Papers 11-016/1, Tinbergen Institute.
- Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
- Chao, Angela & Schor, Juliet B., 1998. "Empirical tests of status consumption: Evidence from women's cosmetics," Journal of Economic Psychology, Elsevier, vol. 19(1), pages 107-131, February.
- George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
When requesting a correction, please mention this item's handle: RePEc:zbw:wzbmbh:spii2013211. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.