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Can consumer complaints reduce product reliability? Should we worry?

Acceso Cerrado
ID Minciencias: WP-0001491071-10
Ranking: WP-WP

Abstract:

Abstract: We analyze a monopolist’s pricing and product reliability problem when consumers are entitled to product replacement but have heterogeneous cost of exercising this right, and we assess the implications of a decrease in consumers’ claiming cost on reliability, pro?t, and welfare. We ?nd that reducing consumers’ claiming cost may reduce reliability and increase pro?t. Additionally, the model can explain why some ?rms encourage consumers to complain while others discourage consumers can explain why some ?rms encourage consumers to complain while others discourage consumers sumers’ claiming cost are relatively low and the ?rm prefers to promote complaints; consequently we ?nd that encouraging complaints will eventually increase welfare.

Tópico:

Law, Economics, and Judicial Systems

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Información de la Fuente:

FuenteRePEc: Research Papers in Economics
Cuartil año de publicaciónNo disponible
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Enlaces e Identificadores:

Minciencias IDWP-0001491071-10Scienti ID0001491071-10Openalex URLhttps://openalex.org/W3121789411
Documento de trabajo