In a competitive market one might expect a strong positive relationship between price and product quality. This paper reports the results of an empirical investigation into the strength of the price-quality relationship. The data set consisted of 413 product tests, involving 6580 brands, published in Consumentengids from 1977-1986. For most products the relationship between price and quality was weak. Hypotheses were developed and tested to explain the variation of price-quality correlations across products. Further, price-quality correlations were found to be lower when the inflation rate was relatively high. It was concluded that, in general, price appears to be a poor market signal of quality. © 1988 H. E. Stenfert Kroese B.V.
CITATION STYLE
Steenkamp, J. B. E. M. (1988). The relationship between price and quality in the marketplace. De Economist, 136(4), 491–507. https://doi.org/10.1007/BF01803598
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