Reputation and Entry

Jeffrey Butler, Enrica Carbone (), Pierluigi Conzo and Giancarlo Spagnolo

Labsi Experimental Economics Laboratory University of Siena from University of Siena

Abstract: This paper reports results from a laboratory experiment exploring the relationship between reputation and entry in procurement. We propose a procurement model with reputation and entry assigning to the entrant a reputational advantage of varying size across treatments. There is widespread concern among regulators that favoring suppliers with good past performance, a standard practice in private procurement, may hinder entry by new (smaller or foreign) firms in public procurement markets. Our results suggest that while some reputational mechanisms indeed reduce the frequency of entry, appropriately designed reputation mechanisms actually stimulate it. Since quality increases but not prices, our data also suggest that the introduction of reputation may generate large welfare gains for the buyer.

Keywords: Entry; Feedback mechanisms; Governance; Incomplete contracts; Limited enforcement; Incumbency; Multidimensional competition; Participation; Past performance; Procurement; Quality; Reputation; Vendor rating. (search for similar items in EconPapers)
JEL-codes: H57 L14 L15 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-com, nep-cta, nep-exp, nep-pub and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.labsi.org/wp/labsi45.pdf (application/pdf)

Related works:
Journal Article: Past performance and entry in procurement: An experimental investigation (2020)
Working Paper: Reputation and Entry in Procurement (2013)
Working Paper: Reputation and Entry (2013)
Working Paper: Reputation and Entry (2012)
Working Paper: Reputation and Entry (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:usi:labsit:045

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