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Firms and Collective Reputation: a Study of the Volkswagen Emissions Scandal

Ruediger Bachmann (), Gabriel Ehrlich, Ying Fan (), Dimitrije Ruzic and Benjamin Leard

No 26117, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper uses the 2015 Volkswagen (VW) emissions scandal as a natural experiment to provide evidence that collective reputation externalities are economically significant. Using a combination of difference-in-differences and demand estimation approaches, we document a spillover effect from the scandal to the non-VW German auto manufacturers. The spillover amounts to an average drop of $2,057 in consumer valuations of these manufacturers’ vehicles and to a 34.6% reduction in their annual sales. We substantiate our interpretation that the estimates reflect a reputation spillover using data on internet search behavior and direct measures of consumer sentiment from Twitter.

JEL-codes: D12 D22 D90 L14 L15 L62 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-ene, nep-env and nep-tre
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