Warranties without Commitment to Market Participation

Bigelow, John P.; Cooper, Russell; Ross, Thomas W.

doi:10.2307/2526951

Cited by 11 publications

(8 citation statements)

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“…This implies that the consumer utility for a failed product does not necessarily equal zero and may even be positive. Our utility functions are consistent with the literature (Cooper & Ross, ; Bigelow et al., ; Lutz & Padmanabhan, , ).…”

Section: Modelsupporting

confidence: 89%

“…The customer cannot observe the product quality at the beginning of the first period because of the newness of the product. This is different from the assumption made in Bigelow et al (1993) and Lutz and Padmanabhan (1998) where it is assumed that the customer knows the quality in Period I. In the absence of quality information, consumers measure perceived quality of the product from quality signaling information, which are product warranty and the manufacturer's quality reputation.…”

Section: Basic Model Setupmentioning

confidence: 89%

“…This assumption is also used in Bigelow et al. (). We, however, do allow for the possibility that the manufacturer may target only the high segment (Strategy H), thus selling a lower volume in Period II.…”

Section: Modelmentioning

confidence: 99%

“…We consider a manufacturer (he) who produces a new product in a monopoly market, and sells the product to consumers (she) in a two-period horizon. Following the literature (Cooper & Ross, 1985;Bigelow, Cooper, & Ross, 1993;Lutz & Padmanabhan, 1995, 1998, we assume that each unit of the product sold either "works" or "not works" upon purchase. A working product generates v dollars of value for the customer, which is also the customer's willingness to pay or monetary valuation for the product.…”

Section: Basic Model Setupmentioning

confidence: 99%

“…The market size is the same as in Period I, when the manufacturer sells to both segments in Period II. This assumption is also used in Bigelow et al (1993). We, however, do allow for the possibility that the manufacturer may target only the high segment (Strategy H), thus selling a lower volume in Period II.…”

Section: Manufacturer's Market Coverage Strategiesmentioning

confidence: 99%

See 4 more Smart Citations

The Impact of Quality Perception and Consumer Valuation Change on Manufacturer's Optimal Warranty, Pricing, and Market Coverage Strategies

Wang

Chhajed

et al. 2018

Decision Sciences

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We consider a manufacturer who produces and sells a new product in a monopoly market. The new product quality is unobservable to consumers before purchase. Consumers make purchase decisions based on their perception of product quality. In addition, consumer valuation toward the product will be reduced if a product failure is experienced. We formulate a two‐period model to analyze the impact of consumer quality perception and consumer valuation change on manufacturer's optimal decisions over quality, warranty, price, and market coverage strategies. We find that it is optimal for the manufacturer to offer warranty compensation that is higher than the purchase price when he has a low quality reputation but is offering a high‐quality product. We also identify the optimal strategy for the manufacturer in terms of market coverage. Specifically, when the consumer valuation discount factor due to product failure experience is high, it is optimal for the manufacturer to serve only the high segment in the second period. Otherwise, serving both the high and the low segments generates more profit. We further investigate consumer welfare and identify win‐win conditions, where the optimal strategy of the manufacturer benefits the consumers as well.

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Section: Modelsupporting

confidence: 89%

Section: Basic Model Setupmentioning

confidence: 89%

Section: Modelmentioning

confidence: 99%

Section: Basic Model Setupmentioning

confidence: 99%

Section: Manufacturer's Market Coverage Strategiesmentioning

confidence: 99%

See 3 more Smart Citations

The Impact of Quality Perception and Consumer Valuation Change on Manufacturer's Optimal Warranty, Pricing, and Market Coverage Strategies

Wang

Chhajed

et al. 2018

Decision Sciences

View full text Add to dashboard Cite

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Understanding firm exit: a systematic literature review

et al. 2021

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We investigate the corpus of literature on firm exit by means of a systematic literature review (SLR) which yields a final sample of 142 journal articles for the period 1991–2020. The phenomenon of firm exit is explored from a variety of perspectives: business exit; exit at the individual entrepreneur level; exit from specific markets; exit from foreign markets; and the role of exit for industrial dynamics conceived more broadly. Special attention is given to the various exit routes, including voluntary liquidation, mergers and acquisitions (M&A), initial public offerings (IPO), and of course bankruptcy. The SLR sets the scene for the Special Issue papers that are presented towards the end, and we conclude with some suggestions for future research.The Plain English Summary This article develops a systematic literature review around three decades of firm exit research, patterns, developments, and intriguing gaps. In this paper, we systematically review 142 studies on firm exit from various perspectives, identify major patterns, and outline the debate around firm exit. We propose reflections useful for scholars willing to engage in firm exit research in the future and set the scene for the special issue papers. Overall, this work shows the remarkable progress made in the area of firm exit that has evolved from the view of exit as a homogenous event signaling failure to a vision of exit as a heterogenous event. Exploring the sources of heterogeneity of exits from various perspectives could offer promising paths for future research.

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