Reputational Externality and Self-Regulation
AbstractProfessional associations and other producer groups often complain that their reputation is damaged by other groups providing a similar but lower-quality service and that the latter should be regulated. We examine the conditions under which a common regulatory regime can induce Pareto-improvements by creating a common reputation for quality among heterogeneous producers, when the regulator cannot commit to a given quality. A common reputation can be created only if the groups are not too different and if marginal cost is declining. High cost groups and small groups benefit most from forming a common regime.
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 Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0628.
Date of creation: Mar 2006
Date of revision:
Note: ET, IO
Contact details of provider:
Web page: http://www.econ.cam.ac.uk/index.htm
Keywords: Quality Regulation; Licensing; Collective Reputation; Reputational Externality;
Find related papers by JEL classification:
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
- L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-04-01 (All new papers)
- NEP-COM-2006-04-01 (Industrial Competition)
- NEP-REG-2006-04-01 (Regulation)
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.:
- Meyer, Margaret A & Vickers, John, 1995.
"Performance Comparisons and Dynamic Incentives,"
CEPR Discussion Papers
1107, C.E.P.R. Discussion Papers.
- 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, 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, 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.
- Law, Marc T. & Kim, Sukkoo, 2005.
"Specialization and Regulation: The Rise of Professionals and the Emergence of Occupational Licensing Regulation,"
The Journal of Economic History,
Cambridge University Press, vol. 65(03), pages 723-756, September.
- Marc T. Law & Sukkoo Kim, 2004. "Specialization and Regulation: The Rise of Professionals and the Emergence of Occupational Licensing Regulation," NBER Working Papers 10467, National Bureau of Economic Research, Inc.
- 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.
- Banerjee, Abhijit V & Besley, Timothy & Guinnane, Timothy W, 1994.
"Thy Neighbor's Keeper: The Design of a Credit Cooperative with Theory and a Test,"
The Quarterly Journal of Economics,
MIT Press, vol. 109(2), pages 491-515, May.
- Guinnane, T. & Banerjee, A. & Besley, T., 1993. "Thy Neighbor's Keeper: the Design of a Credit Cooperative with Theory and a Test," Papers 705, Yale - Economic Growth Center.
- Shapiro, Carl, 1986. "Investment, Moral Hazard, and Occupational Licensing," Review of Economic Studies, Wiley Blackwell, vol. 53(5), pages 843-62, October.
- Benabou, Roland & Gertner, Robert, 1993. "Search with Learning from Prices: Does Increased Inflationary Uncertainty Lead to Higher Markups?," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 69-94, January.
- Shaked, Avner & Sutton, John, 1981. "The Self-Regulating Profession," Review of Economic Studies, Wiley Blackwell, vol. 48(2), pages 217-34, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb).
If references are entirely missing, you can add them using this form.