ABSTRACT
Producer estimates of consumer willingness-to-pay may be based on market research, such as consumer surveys, case studies, focus groups, and so forth. Unless quantity, x i , has also been targeted, a process called as double-targeting, utility maximization would still apply to quantity of the targeted variety. It assumes it is the goal of producers to maximize revenues for all of the varieties they offer for sale. In other words, in quality-quantity space there is learning on the part of both parties to transactions, there are hunter-prey phenomena, and, there may well be gaming behaviors on the part of both consumers and producers. Our model includes perception of quality by the consumer, as well as the producer's need to assess and adjust to any changes in consumer perception. It assumes that producers will conduct periodic analyses of alternative values of bip so as to maximize revenues for the varieties they offer in the market.
