The Economics of Collective Brands
AbstractWe consider the consequences of a shared brand name such as geographical names used to identify high quality products, for the incentives of otherwise autonomous firms to invest in quality. We contend that such collective brand labels improve communication between sellers and consumers, when the scale of production is too small for individual firms to establish reputations on a stand alone basis. This has two opposing effects on member firms’ incentives to invest in quality. On the one hand, it increases investment incentives by increasing the visibility and transparency of individual member firms, which increases the return from investment in quality. On the other hand, it creates an incentive to free ride on the group’s reputation, which can lead to less investment in quality. We identify parmater values under which collective branding delivers higher quality than is achievable by stand alone firms.
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Bibliographic InfoPaper provided by Bar-Ilan University, Department of Economics in its series Working Papers with number 2010-11.
Date of creation: Jul 2010
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This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-07-24 (Agricultural Economics)
- NEP-ALL-2010-07-24 (All new papers)
- NEP-MKT-2010-07-24 (Marketing)
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.:
- Robert Evans & Timothy W. Guinnane, 2007.
"Collective Reputation, Professional Regulation and Franchising,"
Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University
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.
- Garcia, Daniel, 2014. "Branding and Collusion in Vertically Differentiated Industries," MPRA Paper 54010, University Library of Munich, Germany.
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