TITLE

SIGNALLING PRICE IMAGE USING ADVERTISED PRICES

AUTHOR(S)
Simester, Duncan
PUB. DATE
March 1995
SOURCE
Marketing Science;1995, Vol. 14 Issue 2, p166
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This paper addresses the issue of retail price image by offering an explanation for how and when stores can use their advertised prices to signal the prices of other products in the store. A model of a two-product retail market is presented in which stores advertise the price of one product and customers do not know the price of the other product before selecting which store to visit. In a model with full customer information, stores with different marginal costs charge different prices for each product. When customers do not know each store's marginal cost type, an opportunity arises for each store to signal its cost type using its advertised prices. In such a model, additional equilibria exist. In particular, stores with different costs may charge the same advertised price while continuing to charge different prices for the unadvertised product. Data from competing drycleaning stores is generally consistent with the model predictions. A number of additional properties of the equilibria are discussed and possible extensions to the model are proposed.
ACCESSION #
4474861

 

Related Articles

  • Retail Sparks Market Surge. Ryan, Thomas J. // WWD: Women's Wear Daily;12/28/2000, Vol. 180 Issue 121, p2 

    Reports on the stock indexes of retail stores in New York as of December 2000. Increase in the Dow Jones Industrial Average; Percentage of the Nasdaq over-the-counter market; Stock market gains of specialty stores.

  • The Size and Frequency of Price Changes: Evidence from Grocery Stores. Powers, Elizabeth T.; Powers, Nicholas J. // Review of Industrial Organization;Jun2001, Vol. 18 Issue 4, p397 

    Analyzes the variations in the size and frequency of price changes among retail stores. Influence of industrial and product heterogeneity on retail prices; Comparison between the monopoly and duopoly markets; Absence of asymmetrical price rigidity.

  • On the stability of the inter-industry structure of earnings in the UK: 1954—1978. Lawson, Tony // Cambridge Journal of Economics;Sep82, Vol. 6 Issue 3, p249 

    Focuses on the stability of inter-industry structure of earnings in Great Britain. Adjustment of nominal wages and earnings to changes in consumer prices and employment taxation; Effects of price changes on variation in earnings; Assessment of the consistency of real wage resistance hypothesis.

  • Equilibrium in a Futures Market. Baesel, Jerome; Grant, Dwight // Southern Economic Journal;Oct82, Vol. 49 Issue 2, p320 

    As we indicated, the business transactions of those economic units with a commercial or production interest in the commodity determine, in the absence of speculators, the relationship between the futures price, P, and the expected value of the future spot price, E(P). When bakers sell...

  • Single Versus Multi-market Approach: An Application to the Greek Cotton Market. Dadakas, Dimitrios; Katranidis, Stelios // Atlantic Economic Journal;Dec2008, Vol. 36 Issue 4, p469 

    Estimation of the price-induced welfare effects in vertical and horizontal market settings may prove a tricky task when multiple price changes are taken into account. Whether a multi-market sequential approach or a single-market approach is used the well-established, theoretical result suggests...

  • WWD stock market index for May 15.  // WWD: Women's Wear Daily;5/16/1995, Vol. 169 Issue 94, p2 

    Presents `WWD' newspaper's stock market index for May 15, 1995. Performance of various sectors of the clothing retail trade.

  • PPI: Hospital costs show 0.1% rise.  // AHA News;05/15/2000, Vol. 36 Issue 19, p2 

    Provides statistics on the status of hospital prices in the United States as of April 2000. General medical and surgical hospitals; Psychiatric and other specialty hospitals; Producer Price Index.

  • Stable Prices.  // Time;Sep1958, Vol. 72 Issue 9, p56 

    The article reports on the rise of the Consumer Price Index of the U.S. due to increased costs of transportation and medical services.

  • municipal cost indexes.  // American City & County;Dec2005, Vol. 120 Issue 13, p55 

    Indexes of municipal cost, construction cost, consumer price and producer price in the U.S. as of December 2005 are presented.

Share

Read the Article

Courtesy of VIRGINIA BEACH PUBLIC LIBRARY AND SYSTEM

Sign out of this library

Other Topics