Customer Satisfaction and Optimal Resource Allocations
7 Pages Posted: 3 Mar 2008 Last revised: 10 Aug 2011
Date Written: February 1, 2008
Abstract
Economists in business schools who co-teach courses with other business school faculty often struggle with integrating constructs and concepts widely used in other disciplines into basic economic theory. In this note we show how the marketing construct, "customer satisfaction," fits rather naturally into the profit maximizing resource allocation models of economics. The goal of this note is to propose a framework which lays out the role of customer satisfaction on both the demand and cost sides of the market thereby integrating customer satisfaction into a traditional economic model of profit maximizing pricing and resource allocation decisions - a task which, to our knowledge, has not been done.
JEL Classification: D01
Suggested Citation: Suggested Citation