Does Price Signal Quality? Strategic Implications of Price as a Signal of Quality for the Case of Genetically Modified Food

Abstract

We add to the limited empirical literature on consumers' use of price as a quality signal by testing if the traditional downward-sloping consumption-price relationship fails to hold for GM products using data collected from a nationally representative mail survey featuring several hypothetical product choice scenarios. Statistical evidence is mixed across the three products investigated but suggests that survey respondents use price as a signal of the quality of GM products. Implications for firm strategy are discussed.Conjoint analysis, genetically modified food, pricing strategy, price-quality relationship, Demand and Price Analysis,