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CRC 901 – On-The-Fly Computing (OTF Computing) Show image information

CRC 901 – On-The-Fly Computing (OTF Computing)

Thursday, 18.07.2013 | 13.00 Uhr

Talk given by Prof. Cheng-Zhong Qin (University Santa Barbara und Shandong University)

On July 18, 2013, Prof. Cheng-Zhong Qin will give a talk on "Price and Shortage as Signals of Quality".


This paper analyzes the role of seller-induced shortage as a signal of quality for a monopoly firm. Unlike dissipative advertising, the cost of inducing shortage is different for different quality types. It is shown that under certain conditions, a high-quality monopoly firm (of a new indivisible product) that signals quality by properly setting price and inducing shortage makes more pro t than using price and dissipative advertising. The result provides a rationale for why high quality product monopolies may prefer to initially limit supply with or without lowering the price.

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