When Does Variety Increase with Quality?
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| Title: | When Does Variety Increase with Quality? |
|---|---|
| Authors: | Basov, Suren1 (AUTHOR), Danilkina, Svetlana1 (AUTHOR), Prentice, David2 (AUTHOR) dprentice719@gmail.com |
| Source: | Review of Industrial Organization. May2020, Vol. 56 Issue 3, p463-487. 25p. 3 Charts, 9 Graphs. |
| Subjects: | Product quality, Price discrimination, Forecasting |
| Abstract: | In this paper we provide a novel explanation of the relationship between product quality and variety. We develop a simple theoretical model with nearly rational consumers, who randomize among all alternatives that yield the same utility for them but could make a mistake of choosing a slightly worse alternative. We show that it is optimal for a firm to offer more varieties of its higher quality, more profitable, products, in order to price discriminate more effectively. When the market is thin at the very top quality level, the number of varieties first increases and then decreases, which results in the overall hump-shaped relationship between the number of varieties and quality. We find empirical support for our qualitative predictions in the Australian car market. [ABSTRACT FROM AUTHOR] |
| Copyright of Review of Industrial Organization is the property of Springer Nature and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) | |
| Database: | Engineering Source |
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| Header | DbId: egs DbLabel: Engineering Source An: 142738026 AccessLevel: 6 PubType: Academic Journal PubTypeId: academicJournal PreciseRelevancyScore: 0 |
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| Items | – Name: Title Label: Title Group: Ti Data: When Does Variety Increase with Quality? – Name: Author Label: Authors Group: Au Data: <searchLink fieldCode="AR" term="%22Basov%2C+Suren%22">Basov, Suren</searchLink><relatesTo>1</relatesTo> (AUTHOR)<br /><searchLink fieldCode="AR" term="%22Danilkina%2C+Svetlana%22">Danilkina, Svetlana</searchLink><relatesTo>1</relatesTo> (AUTHOR)<br /><searchLink fieldCode="AR" term="%22Prentice%2C+David%22">Prentice, David</searchLink><relatesTo>2</relatesTo> (AUTHOR)<i> dprentice719@gmail.com</i> – Name: TitleSource Label: Source Group: Src Data: <searchLink fieldCode="JN" term="%22Review+of+Industrial+Organization%22">Review of Industrial Organization</searchLink>. May2020, Vol. 56 Issue 3, p463-487. 25p. 3 Charts, 9 Graphs. – Name: Subject Label: Subjects Group: Su Data: <searchLink fieldCode="DE" term="%22Product+quality%22">Product quality</searchLink><br /><searchLink fieldCode="DE" term="%22Price+discrimination%22">Price discrimination</searchLink><br /><searchLink fieldCode="DE" term="%22Forecasting%22">Forecasting</searchLink> – Name: Abstract Label: Abstract Group: Ab Data: In this paper we provide a novel explanation of the relationship between product quality and variety. We develop a simple theoretical model with nearly rational consumers, who randomize among all alternatives that yield the same utility for them but could make a mistake of choosing a slightly worse alternative. We show that it is optimal for a firm to offer more varieties of its higher quality, more profitable, products, in order to price discriminate more effectively. When the market is thin at the very top quality level, the number of varieties first increases and then decreases, which results in the overall hump-shaped relationship between the number of varieties and quality. We find empirical support for our qualitative predictions in the Australian car market. [ABSTRACT FROM AUTHOR] – Name: AbstractSuppliedCopyright Label: Group: Ab Data: <i>Copyright of Review of Industrial Organization is the property of Springer Nature and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract.</i> (Copyright applies to all Abstracts.) |
| PLink | https://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=egs&AN=142738026 |
| RecordInfo | BibRecord: BibEntity: Identifiers: – Type: doi Value: 10.1007/s11151-019-09704-7 Languages: – Code: eng Text: English PhysicalDescription: Pagination: PageCount: 25 StartPage: 463 Subjects: – SubjectFull: Product quality Type: general – SubjectFull: Price discrimination Type: general – SubjectFull: Forecasting Type: general Titles: – TitleFull: When Does Variety Increase with Quality? Type: main BibRelationships: HasContributorRelationships: – PersonEntity: Name: NameFull: Basov, Suren – PersonEntity: Name: NameFull: Danilkina, Svetlana – PersonEntity: Name: NameFull: Prentice, David IsPartOfRelationships: – BibEntity: Dates: – D: 01 M: 05 Text: May2020 Type: published Y: 2020 Identifiers: – Type: issn-print Value: 0889938X Numbering: – Type: volume Value: 56 – Type: issue Value: 3 Titles: – TitleFull: Review of Industrial Organization Type: main |
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