Can consumer complaints reduce product reliability? Should we worry?

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, profit, and welfare. We find that reduci...

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Autor Principal: Coleff, Joaquín
Formato: Documento de trabajo (Working Paper)
Lenguaje:Español (Spanish)
Publicado: Universidad del Rosario 2013
Materias:
Acceso en línea:http://repository.urosario.edu.co/handle/10336/10968
id ir-10336-10968
recordtype dspace
spelling ir-10336-109682019-09-19T12:37:01Z Can consumer complaints reduce product reliability? Should we worry? Coleff, Joaquín Comercio interno (Comercio doméstico) Quejas del consumidor Responsabilidad del fabricante Garantía Product reliability Consumer complaints Liability cost Warranty 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, profit, and welfare. We find that reducing consumers’ claiming cost may reduce reliability and increase profit. Additionally, the model can explain why some firms encourage consumers to complain while others discourage consumers from complaining. We also show that welfare and profit are partially aligned, specially when consumers’ claiming cost are relatively low and the firm prefers to promote complaints; consequently, we find that encouraging complaints will eventually increase welfare 2013-12 2015-10-06T12:36:11Z info:eu-repo/semantics/workingPaper info:eu-repo/semantics/acceptedVersion http://repository.urosario.edu.co/handle/10336/10968 Universidad del Rosario, Facultad de Economía spa info:eu-repo/semantics/openAccess application/pdf Universidad del Rosario Facultad de Economía instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR instname:Universidad del Rosario
institution EdocUR - Universidad del Rosario
collection DSpace
language Español (Spanish)
topic Comercio interno (Comercio doméstico)
Quejas del consumidor
Responsabilidad del fabricante
Garantía
Product reliability
Consumer complaints
Liability cost
Warranty
spellingShingle Comercio interno (Comercio doméstico)
Quejas del consumidor
Responsabilidad del fabricante
Garantía
Product reliability
Consumer complaints
Liability cost
Warranty
Coleff, Joaquín
Can consumer complaints reduce product reliability? Should we worry?
description 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, profit, and welfare. We find that reducing consumers’ claiming cost may reduce reliability and increase profit. Additionally, the model can explain why some firms encourage consumers to complain while others discourage consumers from complaining. We also show that welfare and profit are partially aligned, specially when consumers’ claiming cost are relatively low and the firm prefers to promote complaints; consequently, we find that encouraging complaints will eventually increase welfare
format Documento de trabajo (Working Paper)
author Coleff, Joaquín
author_facet Coleff, Joaquín
author_sort Coleff, Joaquín
title Can consumer complaints reduce product reliability? Should we worry?
title_short Can consumer complaints reduce product reliability? Should we worry?
title_full Can consumer complaints reduce product reliability? Should we worry?
title_fullStr Can consumer complaints reduce product reliability? Should we worry?
title_full_unstemmed Can consumer complaints reduce product reliability? Should we worry?
title_sort can consumer complaints reduce product reliability? should we worry?
publisher Universidad del Rosario
publishDate 2013
url http://repository.urosario.edu.co/handle/10336/10968
_version_ 1645141294426619904
score 11,365454