The Benefit of Collective Reputation

Zvika Neeman (), Aniko Öry and Jungju Yu ()
Additional contact information
Zvika Neeman: Tel Aviv University, https://www.tau.ac.il
Jungju Yu: Yale School of Management, https://som.yale.edu/

No 2068, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We study a model of collective reputation and use it to analyze the benefit of collective brands. Consumers form beliefs about the quality of an experience good that is produced by one firm that is part of a collective brand. Consumers� limited ability to distinguish among firms in the collective and to monitor firms� investment decisions creates incentives to free-ride on other firms� investment efforts. Nevertheless, we show that collective brands induce stronger incentives to invest in quality than individual brands under two types of circumstances: if the main concern is with quality control and the baseline reputation of the collective is low, or if the main concern is with the acquisition of specialized knowledge and the baseline reputation of the collective is high. We also contrast the socially optimal information structure with the profit maximizing choice of branding if branding is endogenous. Our results can be applied to country-of-origin, agricultural appellation, and other collective brands.

Keywords: Branding; Collective reputation; Commitment; Country of origin (search for similar items in EconPapers)
JEL-codes: C70 D21 D40 D70 L10 L50 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2016-12
New Economics Papers: this item is included in nep-com, nep-gth, nep-ipr, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The benefit of collective reputation (2019)
Working Paper: The Benefit of Collective Reputation (2018)
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