Refunds and returns in a vertically differentiated industry

• Autores: Roman Inderst, Gilad Tirosh
• Localización: International journal of industrial organization, ISSN 0167-7187, Vol. 38, Nº. 1, 2015, págs. 44-51
• Idioma: inglés
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• Resumen

  • Firms frequently offer refunds, both when physical products are returned and when service contracts are terminated prematurely. We show how refunds act as a �metering device� when consumers learn about their personal valuation while experimenting with the product or service. Our theory predicts that low-quality firms offer inefficiently strict terms for refunds, while high-quality firms offer inefficiently generous terms. This may help to explain the observed variety in contractual terms.