Parendo, Shane; Qin, Cheng-Zhong - In: Frontiers of Economics in China 7 (2012) 3, pp. 363-372
This paper analyzes the role of price as a signal of the quality of a monopoly firm's new product. The quality of the goods is drawn from a continuum and is unknown to consumers. We establish a unique separating equilibrium using equilibrium characterization results for signaling games. The...