The benefit of collective reputation

Zvika Neeman, Aniko Öry and Jungju Yu

RAND Journal of Economics, 2019, vol. 50, issue 4, 787-821

Abstract: We study a model of reputation with two long‐lived firms who operate under a collective brand or as two individual brands. Firms' investments in quality are unobserved and can only be sustained through reputational concerns. In a collective brand, consumers cannot distinguish between the two firms. In the long run, this generates incentives to free‐ride on the other firm's investment, but in the short run, it mitigates the temptation to milk a good reputation. The signal structure and consumers' prior beliefs determine which effect dominates. We interpret our findings in light of the type of industry in which the firms operate.

Date: 2019
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Citations: View citations in EconPapers (6)

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https://doi.org/10.1111/1756-2171.12296

Related works:
Working Paper: The Benefit of Collective Reputation (2018)
Working Paper: The Benefit of Collective Reputation (2016)
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