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Pricing Policies Contingent on Observed Product Quality
1966
Technometrics
Expanded use of incentive contracts has created interest in procurement arrangements in which unit purchase price varies as a function of observed product quality. Under the assumption that at a knovn cost, a producer can control the true quality of his output, a production and procurement situation is described in which a riskaverse producer and consumer both attempt to maximize expected profit --the consumer by selecting a pricing strategy and sample size, and the producer by then selecting
doi:10.1080/00401706.1966.10490329
fatcat:uji6tgqezvbn3o6gpa5m5asteq