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Title Price Signalling Differentiated Experience Goods: Are Uniform Movie Prices a Puzzle?
Author In-Uck Park (University of Bristol) and Joon Song (Sungkyunkwan University)
Volume 37 Number 1
Pages 85-113 
Keywords Experience Good, Movie Pricing, Price Signalling, Uniform Pricing
Abstract In a simple static model of differentiated experience goods supplied by a single seller, we show that both a uniform price equilibrium and a price signalling equilibrium coexist. This is in contrast to the received wisdom that price signalling of quality is nonviable in static settings. We also show that the sellers profit is always higher in the price signalling equilibrium than in the uniform price equilibrium, but the consumer surplus and social welfare may be higher in either equilibrium depending on the distribution of the consumerstastes for the differentiated goods.
File KER-20210101-37-1-04.pdf
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