ENTRY #22     Price competition, attraction effects, and line–extension effects: What are their hidden returns?

Timothy B. Heath

Professor, Muma College of Business, University of South Florida


Three asymmetries reveal hidden returns to quality best appreciated by first understanding dominance: A dominates B if A is superior to B on at least one dimension (e.g., quality) and inferior on none (e.g., price). Example: when A offers more quality than B while charging the same price, meaning there is no price-quality trade-off and essentially no one chooses (the dominated) Brand B.

1. Asymmetric Price Competition. Various studies find that discounting ...

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