Firms invest significantly in advertising with the intent of influencing consumers favorably towards their goods. Along with advertising, word of mouth also plays an important role in shaping consumer opinion about a firm's goods. In many contexts, word of mouth is affected by behaviors such as...

In a monopoly market for an experience good the diffusion of product-quality information may depend on whether or not the information is favorable. To capture this asymmetry, our model uses as its information source a quality survey which suffers from response bias. Consumers may attempt to...

We compare certification to a minimum quality standard (MQS) policy in a duopolistic industry where firms incur quality-dependent fixed costs and only a fraction of consumers observes the quality of the offered goods. Compared to the unregulated outcome, both profits and social welfare would...

We provide a dynamic, game-theoretic model to examine a firm’s quality and pricing decisions for a new experience good. Early consumers do not observe product quality prior to purchase but can learn it after purchase and share that product-quality information with later consumers, for example,...

One striking development associated with the explosion of e-commerce is the increased transparency of sellers' quality. In this paper we analyze how this affects firms' incentives to invest in quality when the outcome of investment is uncertain. We identify two conflicting effects. On the one...

We examine the impact of airline codesharing on consumer choice behavior in non-stop international route markets. Using stated preference data, we document that consumer valuation of flights by alien foreign carriers is significantly higher if these flights are offered as codeshare products by...

If a product has two dimensions of quality, one observable and one not, a firm can use observable quality as a signal of unobservable quality. The correlation between consumers' valuation of high quality in each dimension is a key determinant of the feasibility of such signaling. A firm may use...

This paper examines the publication of quality indicators in service markets with public finance systems, such as education and healthcare markets. We provide a spatial model of product differentiation in which the reporting of such indicators increases consumers’ decision weight on quality...

If a product has two dimensions of quality, one observable and one not, a firm can use observable quality as a signal of unobservable quality. The correlation between consumers' valuation of high quality in each dimension is a key determinant of the feasibility of such signaling. A firm may use...

This paper shows that best-price guarantees can enhance welfare, in contrast to findings in recent literature. While a high-quality monopolist can signal its quality strictly through high prices, using both price and a best-price guarantee may allow the firm to signal its quality with a smaller...