For decades, economists have taught that competition between product brands leads to lower prices in the marketplace because consumers generally buy the lowest-priced items. However, researchers from three business schools recently noticed this assumption fell flat when it came to luxury items, like wine and chocolate. Despite an ever-increasing array of brands consumers can choose from at stores, prices on luxury items continue to climb with each new product that comes to market. Researchers say that’s because in the presence of so many options, consumer buying habits change from getting the best price to finding the best quality–and they’re willing to pay more than they should for it.
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