When information asymmetry exists in the market, firms often use the price signal to communicate unobservable quality to consumers. We examine the signaling role of retail price in a decentralized channel. Our normative model demonstrates that there might exist a moderate range of retail prices...

When information asymmetry exists in the market, firms often use the price signal to communicate unobservable quality to consumers. We examine the signaling role of retail price in a decentralized channel. Our normative model demonstrates that there might exist a moderate range of retail prices...

Existing literature that argues for the prevalence of price premiums is examined. An evaluation of an extant model identifies several possible boundary conditions that limit its applicability. A set of propositions is developed based on these boundary conditions, linking buyer, seller and market...