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Image concerns and the provision of quality

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Friedrichsen, Jana

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Corporate Editor Wissenschaftszentrum Berlin für Sozialforschung gGmbH
Abstract 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. (author's abstract)
Keywords motivation; consumption; ethics; image; quality; commodity; market; consumer; picture; product; pricing policy; buying behavior
Classification Marketing; Social Psychology
Document language English
Publication Year 2013
City Berlin
Page/Pages 86 p.
Series Discussion Papers / Wissenschaftszentrum Berlin für Sozialforschung, Forschungsschwerpunkt Markt und Entscheidung, Abteilung Verhalten auf Märkten, SP II 2013-211
Status Published Version; reviewed
Licence Deposit Licence - No Redistribution, No Modifications