Individual and Collective Reputation: Lessons from the Wine Market
AbstractThe concept of reputation has been used in every field of economic research, given its capacity to affect the outcome of all economic and financial transactions. The theoretical debate on reputation is very rich, but the mechanisms of reputation building have not been explored enough from the empirical viewpoint. In this paper we investigate the determinants of firm reputation taking into consideration the interactions between individual and collective reputation. This paper is one of the first attempts to provide robust evidence on the determinants of firm reputation using a large set of controls applied to a database not affected by self-selection bias. In fact, we constructed a new database containing the universe of wineries located in four regions of the North-West of Italy with an established national reputation and focus on the determinants of the “jump” from national to international reputation. Our research confirms the prediction of the theoretical literature and shows the positive effect of firm age, size, investments and producer’s intrinsic motivations, and of collective reputation on individual firm reputation. Cooperatives seem to decrease their reputation when the number of associated members rises, due to free-riding and traceability problems. In contrast with previous research, relying on well-known external consultants does not acquire any outside reputation. Finally, by comparing the regression results on the determinants of national and international reputation it emerges the relevance of the mechanisms of the evaluation process: the higher proximity to the wineries of a national observer permits a better and more technical knowledge of the quality provided, allowing small niche producers with very low productivity to emerge and be known. For the same reason, the national classification system (i.e. the DOCG system) exerts a significant effect only on the international reputation of wineries, but not on the national one where the effect of collective reputation (i.e. the reputation of single denominations like Barolo) seems to prevail.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by American Association of Wine Economists in its series Working Papers with number 45504.
Date of creation: Nov 2008
Date of revision:
reputation; credibility; asymmetric information; quality standards; Industrial Organization; L14; L15;
Other versions of this item:
- Castriota Stefano & Delmastro Marco, 2010. "Individual and Collective Reputation: Lessons from the Wine Market," L'industria, Società editrice il Mulino, issue 1, pages 149-172.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-14 (All new papers)
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.:
- Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006.
"The value of reputation on eBay: A controlled experiment,"
Springer, vol. 9(2), pages 79-101, June.
- Resnick, Paul & Zeckhauser, Richard & Swanson, John & Lockwood, Kate, 2003. "The Value of Reputation on eBay: A Controlled Experiment," Working Paper Series rwp03-007, Harvard University, John F. Kennedy School of Government.
- Robert J. Barro & David B. Gordon, 1984.
"Rules, Discretion and Reputation in a Model of Monetary Policy,"
NBER Working Papers
1079, National Bureau of Economic Research, Inc.
- Barro, Robert J. & Gordon, David B., 1983. "Rules, discretion and reputation in a model of monetary policy," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 101-121.
- Giulio Ecchia & Luca Lambertini, 1995.
"Minimum Quality Standards and Collusion,"
235, Dipartimento Scienze Economiche, Universita' di Bologna.
- Winfree, Jason A. & McCluskey, Jill J., 2003.
"Collective Reputation And Quality,"
2003 Annual meeting, July 27-30, Montreal, Canada
21927, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, vol. 98(4), pages 659-79, November.
- Robert Evans & Timothy W. Guinnane, 2007.
"Collective Reputation, Professional Regulation and Franchising,"
Cowles Foundation Discussion Papers
1627, Cowles Foundation for Research in Economics, Yale University.
- Robert Evans & Timothy W Guinnane, 2007. "Collective Reputation, Professional Regulation and Franchising," Levine's Bibliography 122247000000001563, UCLA Department of Economics.
- Daniel Houser & John Wooders, 2006. "Reputation in Auctions: Theory, and Evidence from eBay," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(2), pages 353-369, 06.
- Melnik, Mikhail I & Alm, James, 2002. "Does a Seller's Ecommerce Reputation Matter? Evidence from eBay Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 50(3), pages 337-49, September.
- Hassan Benchekroun & Ngo Van Long, 2006.
"The Build-up of Cooperative Behavior among Non-cooperative Agents,"
CIRANO Working Papers
- Benchekroun, Hassan & Long, Ngo Van, 2008. "The build-up of cooperative behavior among non-cooperative selfish agents," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 239-252, July.
- Michi Kandori, 2010.
"Social Norms and Community Enforcement,"
Levine's Working Paper Archive
630, David K. Levine.
- Tirole, Jean, 1994.
""A Theory of Collective Reputations" with Applications to the Persistence of Corruption and to Firm Quality,"
IDEI Working Papers
38, Institut d'Économie Industrielle (IDEI), Toulouse.
- Tirole, Jean, 1996. "A Theory of Collective Reputations (with Applications to the Persistence of Corruption and to Firm Quality)," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 1-22, January.
- Tirole, J., 1993. "A Theory of Collective Reputations with Applications to the Persistence of Corruption and to Firm Quality," Working papers 93-13, Massachusetts Institute of Technology (MIT), Department of Economics.
- Francesco Drudi & Alessandro Prati, 1998.
"Signaling Fiscal Regime Sustainability,"
Temi di discussione (Economic working papers)
335, Bank of Italy, Economic Research and International Relations Area.
- Goldberg, Marvin E & Hartwick, Jon, 1990. " The Effects of Advertiser Reputation and Extremity of Advertising Claim on Advertising Effectiveness," Journal of Consumer Research, University of Chicago Press, vol. 17(2), pages 172-79, September.
- Crampes, Claude & Hollander, Abraham, 1995.
"Duopoly and quality standards,"
European Economic Review,
Elsevier, vol. 39(1), pages 71-82, January.
- Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Crampes, C. & Hollander, A., 1992. "Duopoly and Quality Standards," Papers 92.g, Toulouse - GREMAQ.
- Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche 9128, Universite de Montreal, Departement de sciences economiques.
- Johannes H�rner, 2002. "Reputation and Competition," American Economic Review, American Economic Association, vol. 92(3), pages 644-663, June.
- Roland Benabou & Jean Tirole, 2003.
"Intrinsic and Extrinsic Motivation,"
Review of Economic Studies,
Wiley Blackwell, vol. 70(3), pages 489-520, 07.
- Gorton, Gary, 1996. "Reputation Formation in Early Bank Note Markets," Journal of Political Economy, University of Chicago Press, vol. 104(2), pages 346-97, April.
- Maxwell, John W., 1998. "Minimum quality standards as a barrier to innovation," Economics Letters, Elsevier, vol. 58(3), pages 355-360, March.
- Valletti, Tommaso M, 2000. "Minimum Quality Standards under Cournot Competition," Journal of Regulatory Economics, Springer, vol. 18(3), pages 235-45, November.
- Pierre Fleckinger, 2007. "Collective Reputation and Market Structure: Regulating the Quality vs Quantity Trade-of," Working Papers hal-00243080, HAL.
- Landon, Stuart & Smith, Constance, 1998. "Quality expectations, reputation, and price," MPRA Paper 9774, University Library of Munich, Germany.
- Scott Morton, Fiona M & Podolny, Joel M, 2002. "Love or Money? The Effects of Owner Motivation in the California Wine Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 50(4), pages 431-56, December.
- Armando Gomes, 2000. "Going Public without Governance: Managerial Reputation Effects," Journal of Finance, American Finance Association, vol. 55(2), pages 615-646, 04.
- Maksimovic, Vojislav & Titman, Sheridan, 1991. "Financial Policy and Reputation for Product Quality," Review of Financial Studies, Society for Financial Studies, vol. 4(1), pages 175-200.
- Scarpa, Carlo, 1998. "Minimum quality standards with more than two firms1," International Journal of Industrial Organization, Elsevier, vol. 16(5), pages 665-676, September.
- Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
- Raphaël Soubeyran & Elodie Rouvière, 2008. "Collective Reputation, Entry and Minimum Quality Standard," Working Papers 2008.7, Fondazione Eni Enrico Mattei.
- Mosheim, Roberto, 2002. "Organizational Type and Efficiency in the Costa Rican Coffee Processing Sector," Journal of Comparative Economics, Elsevier, vol. 30(2), pages 296-316, June.
- Leland, Hayne E, 1979. "Quacks, Lemons, and Licensing: A Theory of Minimum Quality Standards," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1328-46, December.
- Fishman, Arthur & Finkelshtain, Israel & Simhon, Avi & Yacouel, Nira, 2008. "The Economics of Collective Brands," Discussion Papers 46056, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
- Alexander E. Saak, 2012.
"Collective Reputation, Social Norms, and Participation,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 94(3), pages 763-785.
- Saak, Alexander, 2011. "Collective reputation, social norms, and participation:," IFPRI discussion papers 1107, International Food Policy Research Institute (IFPRI).
- Kolavalli, Shashidhara & Birner, Regina & Flaherty, Kathleen, 2012. "The comprehensive Africa agriculture program as a collective institution:," IFPRI discussion papers 1238, International Food Policy Research Institute (IFPRI).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.