A monopolist's optimal price path over time is examined for situations in which consumers initially misestimate product quality and learn about it by using the good. Information about the product is bundled with the product itself. Two very different cases are studied. In the optimistic case,...

In an earlier article Dixit and Norman studied the welfare effects of advertising. They came to the surprising conclusion that, even accepting postadvertising tastes as the welfare standard, monopoly advertising which raises price is excessive. The point of this comment is to show how and why...

This article analyzes markets in which consumers are imperfectly informed about product quality. An important force that prevents deterioration of the quality supplied by sellers is the formation of firm-specific reputations. It is shown in general that reputations, because they can reward high...