Document Type
Discussion Paper
Publication Date
6-1-1984
CFDP Number
709
CFDP Pages
30
Abstract
We present a signalling model, based on ideas of Phillip Nelson, in which both the introductory price and the level of directly “uninformative” advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good. Repeat purchases play a crucial role in our model.
Recommended Citation
Milgrom, Paul R. and Roberts, John, "Price and Advertising Signals of Product Quality" (1984). Cowles Foundation Discussion Papers. 944.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/944