Collective Reputation, Professional Regulation and Franchising
AbstractCollective reputation and its associated free-rider problem have been invoked to justify state licensing of professions and to explain the incidence of franchising. We examine the conditions under which it is possible to create a Pareto-improving collective reputation among groups of heterogeneous producers. If the regulator or franchisor cannot credibly commit to high quality then a common reputation can be created only if the groups are not too different and if marginal cost is declining. High cost groups benefit most from forming a common regime.
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Date of creation: 17 Sep 2007
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- 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.
- 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
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