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Collective Reputation, Professional Regulation and Franchising




Collective 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.

Suggested Citation

  • 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.
  • Handle: RePEc:cwl:cwldpp:1627

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    References listed on IDEAS

    1. Dirk Bergemann & Stephen Morris, 2007. "Belief Free Incomplete Information Games," Cowles Foundation Discussion Papers 1629, Cowles Foundation for Research in Economics, Yale University.
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    8. Abraham Neyman, 1997. "Correlated Equilibrium and Potential Games," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(2), pages 223-227.
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    Cited by:

    1. 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.
    2. 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.
    3. Arthur Fishman & Israel Finkelstein & Avi Simhon & Nira Yacouel, 2010. "The Economics of Collective Brands," Working Papers 2010-11, Bar-Ilan University, Department of Economics.
    4. Alexander E. Saak, 2012. "Collective Reputation, Social Norms, and Participation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 763-785.

    More about this item


    Quality regulation; Licensing; Collective reputation; Reputational externality; Franchising;

    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


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