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The Economics of Collective Brands


  • Fishman, Arthur
  • Finkelshtain, Israel
  • Simhon, Avi
  • Yacouel, Nira


We 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.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:huaedp:46056

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    References listed on IDEAS

    1. Andersson, Fredrik, 2002. "Pooling reputations," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 715-730, May.
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    6. Luis M. B. Cabral, 2001. "Optimal Brand Umbrella Size," Working Papers 01-06, New York University, Leonard N. Stern School of Business, Department of Economics.
    7. Rafael Rob & Arthur Fishman, 2005. "Is Bigger Better? Customer Base Expansion through Word-of-Mouth Reputation," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 1146-1175, October.
    8. Abhijit V. Banerjee & Esther Duflo, 2000. "Reputation Effects and the Limits of Contracting: A Study of the Indian Software Industry," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 989-1017.
    9. George J. Mailath & Larry Samuelson, 2001. "Who Wants a Good Reputation?," Review of Economic Studies, Oxford University Press, vol. 68(2), pages 415-441.
    10. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
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    12. 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.
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    14. Fishman, A., 1995. "Search with Learning and Price Adjustment Dynamics," Papers 18-95, Tel Aviv - the Sackler Institute of Economic Studies.
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    Cited by:

    1. Yu, Jianyu & Bouamra-Mechemache, Zohra & Zago, Angelo, 2016. "What’s in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names," 149th Seminar, October 27-28, 2016, Rennes, France 244897, European Association of Agricultural Economists.
    2. Zvika Neemam & Aniko Ory & Jungju Yu, 2016. "The Benefit of Collective Reputation," Cowles Foundation Discussion Papers 2068, Cowles Foundation for Research in Economics, Yale University.

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