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CiteWeb id: 19830000108

CiteWeb score: 2807

DOI: 10.2307/1881782

This paper derives an equilibrium price-quality schedule for markets in which buyers cannot observe product quality prior to purchase. In such markets there is an incentive for sellers to reduce quality and take short-run gains before buyers catch on. In order to forestall such quality cutting, the price-quality schedule involves high quality items selling at a premium above their cost. This premium also serves the function of compensating sellers for their investment in reputation. The effects of improved consumer information and of a minimum quality standard on the equilibrium price-quality schedule are studied. In general, optimal quality standards exclude from the market items some consumers would like to buy.

The publication "Premiums for High Quality Products as Returns to Reputations" is placed in the Top 10000 of the best publications in CiteWeb. Also in the category Economics it is included to the Top 1000. Additionally, the publicaiton "Premiums for High Quality Products as Returns to Reputations" is placed in the Top 1000 among other scientific works published in 1983.
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