Reputation and Turnover
AbstractWe consider a repeated duopoly game where each firm privately chooses its investment in quality, and realized quality is a noisy indicator of the firm's investment.We focus on turnover equilibria in which a low-quality realization is penalized by lowering future demand of the firm that delivered this quality. We determine when a turnover equilibrium that gives higher welfare than the static equilibrium exists and how this relates to market fundamentals. We also derive comparative statics properties, and we characterize a set of investment levels and, hence, payoffs that turnover equilibria sustain.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 37 (2006)
Issue (Month): 2 (Summer)
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Web page: http://www.rje.org
Other versions of this item:
- Rafael Rob & Tadashi Sekiguchi, 2004. "Reputation and Turnover," PIER Working Paper Archive 04-032, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Rafael Rob & Tadashi Sekiguchi, 2004. "Reputation and Turnover," KIER Working Papers 594, Kyoto University, Institute of Economic Research.
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Du, Chuang, 2012. "Solving payoff sets of perfect public equilibria: an example," MPRA Paper 38622, University Library of Munich, Germany.
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