Consider the amount of price variation that you have found. Discuss possible explanations and include those relating to "tourist trap" or other models based on imperfect consumer information.
Date Submitted: 12/26/2004 20:04:23
Category: / Business & Economy / Economics
Length: 7 pages (1812 words)
Category: / Business & Economy / Economics
Length: 7 pages (1812 words)
Consumer always face the problems of not knowing which stores sell a good at the lowest price and how quality varies across brands. They know that price do vary on a same product across brands, but they do know not what that price difference represents, for the better qualities that product possess? But are these better qualites worth paying that extra difference in price? If consumers are provided by perfect information about product prices, attributes …
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…charging high prices but relative low quality cameras may have a very convincing and effective information provision system through experts, standards and certification, e.g., warranties and guarantees. These are socially desirable if the benefits to customers outweigh the costs of collecting and disseminating the information.
Bibliography
http://www.pricerunner.com
Modern Industrial Organization - Dennis Carlton and Jeffrey Perloff, Addison Wesly Longman, Inc.
The Economics of Imperfect Information - Louis Phlips, Cambridge University Press
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