Quality of Mass Goods and the Problem of the Representative Consumer

Ekonomia – Zarzadzanie – Marketing. Tryptyk Sadecki. Ksiega jubileuszowa dedykowana prof. J. Dietlowi

10 Pages Posted: 24 Jul 2008 Last revised: 13 Nov 2010

See all articles by Marian W. Moszoro

Marian W. Moszoro

Warsaw School of Economics (SGH); International Monetary Fund (IMF); George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES)

Date Written: 2007

Abstract

Most economic models assume the existence of a representative consumer with mean preferences, which is an obvious simplification. Consumers unveil their heterogeneous preferences through continual choices over goods and their characteristics. However, there is a limit to product segmentation: marketing costs and production costs related to diseconomies of scale. Moreover, mass goods must yield the same quality for the same price for a large number of consumers in a given market. Therefore, the key is to know the consumers' preferences to properly address the product mix. This article explores what quality is from the economic point of view and how difficult it is to set the appropriate quality-price bundle. One can think of voting over plausible outcomes of quality and price. However, if there are three or more consumers with different preferences over two or more variables, stable equilibrium may be impossible to achieve (impossibility theorem), since there will always be a majority in favor of change (paradox of voting). A viable solution to approach the optimum product mix can be the use of interactive methods for multi-criteria optimization.

Note: Downloadable document is in Polish.

Keywords: Voting paradox, consumer behavior, preferences, mass goods, quality

JEL Classification: D01, D11, D72, D81, H41

Suggested Citation

Moszoro, Marian W., Quality of Mass Goods and the Problem of the Representative Consumer (2007). Ekonomia – Zarzadzanie – Marketing. Tryptyk Sadecki. Ksiega jubileuszowa dedykowana prof. J. Dietlowi, Available at SSRN: https://ssrn.com/abstract=1171038

Marian W. Moszoro (Contact Author)

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

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