Trademark Sales, Entry, And The Value Of Reputation
AbstractWe develop an infinite-horizon, overlapping-generations model of reputation in which consumers base willingness to pay for agent services on past performance summarized by a trademark. We show that when trademarks can be sold, successful firms capture the full value of their reputations upon sale but receive smaller premia for good performance while active as service providers. With discounting, all agents are worse off with trademark trade. Taking entry cost into account, we show that trademark trade typically reduces entry. When entry costs are high, welfare is increased by prohibiting such trade. Copyright �2008 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 49 (2008)
Issue (Month): 2 (05)
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- Hongbin Cai & Ichiro Obara, 2009.
"Firm reputation and horizontal integration,"
RAND Journal of Economics,
RAND Corporation, vol. 40(2), pages 340-363.
- Cai, Hongbin, 2004. "Firm Reputation and Horizontal Integration," Santa Cruz Department of Economics, Working Paper Series qt6rk9f1fm, Department of Economics, UC Santa Cruz.
- Hongbin Cai & Ichiro Obara, 2006. "Firm Reputation and Horizontanl Integration," Levine's Bibliography 321307000000000285, UCLA Department of Economics.
- Hongbin Cai & Ichiro Obara, 2008. "Firm Reputation and Horizontal Integration," Levine's Working Paper Archive 122247000000002038, David K. Levine.
- Ichiro Obara, 2004. "Firm Reputation and Horizontal Integration (with H. Cai)," UCLA Economics Online Papers 318, UCLA Department of Economics.
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