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| Author: | Schlee, E.E. |
| Title: | Buyer experimentation and intoductory pricing |
| Journal: | Journal of Economic Behavior and Organization
2001 : MAR, VOL. 44:3, p. 347-362 |
| Index terms: | CONSUMER BEHAVIOUR PRICING |
| Freeterms: | EXPERIMENTATION |
| Language: | eng |
| Abstract: | The authors study the pricing decisions of a monopolist seller in a two-period model in which buyers and the seller are all uncertain about a good's quality. The authors assume that buyers not only learn from experience, but also may experiment, that is, increase the amount of information by consuming more. The authors define an introductory price to be at first period equilibrium price lower than that which maximizes period 1 profit. The motivation for introductory pricing is that, under certain conditions, the seller prefers its buyers to be better informed about quality. A lower initial price increases consumption and hence information. |
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