The paternity of the price-quality ‘value map’

Abstract

In the literature on firm strategy and product differentiation, consumer price–quality trade-offs are sometimes represented using consumer ‘value maps’. These involve the geometric representation of indifferent price and quality combinations as points along curves that are concave to the ‘quality’ axis. In this paper, it is shown that the value map for price–quality tradeoffs may be derived from a Hicksian compensated demand curve for product quality. The paper provides the theoretical link between analytical methods employed in the existing literature on firm strategy and competitive advantage with the broader body of economic analysis.