As information technology improves rapidly and becomes more accessible, it becomes much easier for consumers to gather … consumers are getting “smarter” and more forward-looking, as well as acting more strategically. Recent academic research has … substantially improved our understanding of how forward-looking consumers make decisions. In this chapter, I will discuss some of …

experiences a higher competitive pressure on price since low-quality consumers are more price sensitive and switch more easily to … consumers are less likely to switch to the low-quality product …

's quality choice but consumers do not. Hence, firm B is subject to a moral hazard problem which can potentially be solved by … firm A. Firm A can accept or reject to form an alliance with firm B, which is observed by consumers. If an alliance is … formed, firm A is providing an implicit certification about the rival's product: consumers can infer that firm B is a strong …