The author reports some empirical results on the strength of the quality-price relation. For many products, the relation between quality and price appears to be very weak; hence, for many products, higher prices appear to be poor signals of higher quality.
Get full access to this article
View all access options for this article.
References
1.
FarrellJ. (1980), “Prices as Signals of Quality,” Ph.D. thesis, University of Oxford.
2.
GaborA., and GrangerC. W. J. (1966), “Price as an Indicator of Quality: Report on an Inquiry,”Economica, 33, 43–70.
3.
GeistfeldLoren V. (1982), “The Price-Quality Relationship—Revisited,”Journal of Consumer Affairs, 16(Winter), 334–5.
4.
GrossmanS. J., and StiglitzJ. E. (1980), “The Impossibility of Informational Efficient Markets,”American Economic Review (June), 399–407.
5.
JonesJ. M., and ZufrydenF. S. (1982), “An Approach for Assessing Demographic and Price Influences on Brand Purchase Behavior,”Journal of Marketing, 46(Winter), 36–46.
6.
LeavittHarold J. (1954), “A Note on Some Experimental Findings About the Meaning of Price,”Journal of Business, 27(July), 205–10.
7.
McConnellJ. Douglas (1968), “An Experimental Examination of the Price-Quality Relationship,”Journal of Business, 41(October), 439–44.
8.
McElroyBruce F., and HakerDavid A. (1979), “Unit Pricing Six Years After Introduction,”Journal of Retailing (Fall), 414.
9.
MorrisRuby Turner, and BronsonClaire Sekulski (1969), “The Chaos in Competition Indicated by Consumer Reports,”Journal of Marketing, 33(July), 26–43.
10.
NelsonPhillip (1974), “Advertising as Information,”Journal of Political Economy, 82(July/August), 729–54.
11.
NewmanJ. W., and StaelinR. (1972), “Prepurchase Information Seeking for New Cars and Major Household Appliances,”Journal of Marketing Research, 9(August), 249–57.
12.
OxenfeldtAlfred R. (1950), “Consumer Knowledge: Its Measurement and Extent,”Review of Economics and Statistics, 32, 300–14.
13.
RieszPeter C. (1978), “Price Versus Quality in the Marketplace, 1961–1975,”Journal of Retailing, 54(Winter), 15–28.
14.
RieszPeter C. (1979), “Price-Quality Correlations for Packaged Food Products,Journal of Consumer Affairs, 13(Winter), 236–47.
15.
SchmalenseeRichard (1978), “A Model of Advertising and Product Quality,”Journal of Political Economy, 86(June), 485–503.
16.
ScitovskyT. (1944), “Some Consequences of the Habit of Judging Quality by Price,”Review of Economic Studies, 12, 100–5.
17.
SmallwoodDennis, and ConliskJohn (1979), “Product Quality in Markets Where Consumers are Imperfectly Informed,”Quarterly Journal of Economics, 93(February), 1–23.
18.
SpenceM. (1974), Market Signalling.Cambridge, MA: Harvard University Press.
19.
SprolesGeorge B. (1977), “New Evidence on Price and Product Quality,”Journal of Consumer Affairs, 11(Summer), 63–77.
20.
TullDonald, and BoringR. A., and GonsiorM. H. (1964), “A Note on the Relationship of Price and Imputed Quality,”Journal of Business, 37(April), 186–91.
21.
WigginsSteven N., and LaneW. J. (1983), “Quality Uncertainty, Search, and Advertising,”American Economic Review (December), 881–9.
