The relationship between price and quality: a methodological contribution using fuzzy logic

Abstract

The article presents a methodological contribution to the study of the relation between price and quality of goods. An empirical exercise is performed for a food product. Fuzzy sets theory is used to analyze the relationship between quality and price of products, exploring variants of the consumer's perspective to capture a) the relevance of qualitative characteristics for the establishment of the price to be paid and, alternatively, b) the price relevance as a quality flag. This method approximates the mathematical formalization to consumer manifestation, reducing the necessity for theoretical assumptions inherent to the organization of information through infinitesimal variation techniques. The result of the exercise signals that the price is an indicator of the quality of the merchandises, especially when the quality becomes poor in the perception of the consumers.