Download this Paper Open PDF in Browser

Consumer Sorting of Vertically Differentiated Goods

7 Pages Posted: 1 Jul 2010 Last revised: 29 Jul 2010

Peyton Ferrier

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Qihong Liu

University of Oklahoma - Department of Economics

Date Written: June 28, 2010

Abstract

This paper shows the conditions for consumer sorting to be profitable. Sorting of low quality goods dampens their substitutability with high quality goods and can raise firm's profit even when sorting lowers profit from low quality sales considered alone.

Keywords: Consumer sorting, Adverse selection, Vertical differentiation

JEL Classification: D43, L13

Suggested Citation

Ferrier, Peyton and Liu, Qihong, Consumer Sorting of Vertically Differentiated Goods (June 28, 2010). Available at SSRN: https://ssrn.com/abstract=1632342 or http://dx.doi.org/10.2139/ssrn.1632342

Peyton Ferrier

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5224 (Phone)

Qihong Liu (Contact Author)

University of Oklahoma - Department of Economics ( email )

Norman, OK 73019-2103
United States
405-325-5846 (Phone)

HOME PAGE: http://qliu.oucreate.com

Paper statistics

Downloads
37
Abstract Views
398