A paradox of price-quality and market efficiency : A comparative study of the US and China markets
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Detail(s)
Original language | English |
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Pages (from-to) | 349-365 |
Journal / Publication | International Journal of Research in Marketing |
Volume | 19 |
Issue number | 4 |
Publication status | Published - Dec 2002 |
Externally published | Yes |
Link(s)
Abstract
The price-quality schema rests on an assumption that price is credible information about product quality. However, the credibility of price information varies across different markets. In an inefficient market, consumers would believe in the price-quality relationship to a lesser extent because price information is less credible. Paradoxically, in such a market, sometimes consumers have to rely more on price to infer quality because other product information is less available. With a cross-national perspective, this study investigated the influences of market efficiency and consumer risk aversion on the price-quality schema between the China and the US markets. We found that due to the inefficient market environment, Chinese consumers possess a weaker price-quality schema than American consumers. Chinese consumers are more risk averse than their American counterparts. However, in China, risk-averse consumers are more likely to use price to infer product quality. Implications for global marketing are discussed, and directions for future research are suggested. © 2002 Elsevier Science B.V. All rights reserved.
Research Area(s)
- China, Market efficiency, Measurement invariance, Price-quality schema, Risk aversion
Citation Format(s)
A paradox of price-quality and market efficiency: A comparative study of the US and China markets. / Zhou, Kevin Zheng; Su, Chenting; Bao, Yeqing.
In: International Journal of Research in Marketing, Vol. 19, No. 4, 12.2002, p. 349-365.
In: International Journal of Research in Marketing, Vol. 19, No. 4, 12.2002, p. 349-365.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review