Lim observed that the quantity signaling experiment presumes that for any offer of quantity to sale or purchase, there will be some response price at which no more than any quantity is offered by firm is bought or sold. So, the domination of quantity over price signaling experiment suggests that the firms should encourage their trade agents in order to achieve more sales rather than setting the price by limiting the quantity. Generally, in Lim’s case the domination of quantity setting strategy over pricing is for the benefits of not only monopolists but also customers too. Because in that strategy customers will determine how much they can pay for outputs. On the other hand, Guru-Gharana (2008) conducted research on quantity and price setting behaviors of a monopoly in order to identify why most monopoly firms should follow the price setting strategy instead of quantity setting strategy for achieving maximum efficiency.
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Lim observed that the quantity signaling experiment presumes that for any offer of quantity to sale or purchase. (2019, Apr 29). Retrieved May 8, 2021, from https://midwestcri.org/lim-observed-that-the-quantity-signaling-experiment-presumes-that-for-any-offer-of-quantity-to-sale-or-purchase/