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The Role of Reputation in the Market for Consumer Goods: Entry Barriers and the Wheel of Retailing

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  • Tatsuhiko Nariu

Abstract

Sellers confront problems of strategy in deciding whether to maintain reputations for supplying high-quality goods or low-quality goods. In a spatial competition model an incumbent monopolist deters entry by maintaining a high reputation. But in a model based on differences in consumers' tastes, an incumbent monopolist becomes more vulnerable to entry the higher its reputation is, which is somewhat reminiscent of the "wheel of retailing" phenomenon noted in the marketing literature.

Suggested Citation

  • Tatsuhiko Nariu, 2008. "The Role of Reputation in the Market for Consumer Goods: Entry Barriers and the Wheel of Retailing," Japanese Economy, Taylor & Francis Journals, vol. 35(2), pages 39-53.
    • Handle: RePEc:mes:jpneco:v:35:y:2008:i:2:p:39-53
    DOI: 10.2753/JES1097-203X350203
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