Umbrella Branding and External Certification

Martin Peitz and Hendrik Hakenes

No 6601, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: In a market environment with random detection of product quality, a firm can employ umbrella branding as a strategy to convince consumers of the high quality of its products. Alternatively, a firm can rely on external certification of the quality of one or both of its products. We characterize equilibria in which umbrella branding fully or partially substitutes for external certification. We also show that the potential to signal quality is improved if consumers condition their beliefs on the source of information, namely whether information comes from external certification or from random detection.

Keywords: Certification; Signalling; Umbrella branding (search for similar items in EconPapers)
JEL-codes: D82 L14 L15 M37 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-ind, nep-lab, nep-mic and nep-mkt
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Umbrella branding and external certification (2009)
Working Paper: Umbrella Branding and External Certification (2008)
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