Price as a signal of quality: Canada in the international context

摘要: Studies have shown that price is very poorly correlated with quality. This paper discusses the methodological criticisms of earlier work, concluding original results remain robust. Examination 91 sets Canadian products containing 1020 items reinforces conclusions work for United States and Japan. These international studies contradict conventional wisdom an adequate signal We also test hypotheses a better quality (a) after product tests been published, (b) higher priced which presumably justify larger investments in “search.” data do not support either hypothesis. Some theoretical explanations are outlined conclusion briefly presents implications policy.