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Share the Fame or Share the Blame? The Reputational Implications of Partnerships

Author

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  • Costa, Luis Almeida e
  • Vasconcelos, Luis

Abstract

We use an adverse selection model to study the dynamics of ?rms?reputations when ?rms implement joint projects. We show that in contrast with projects implemented by a single ?rm, in the case of joint projects a ?rm?s reputation does not necessarily increase following a success and does not necessarily decrease following a failure. We also study how reputation considerations a¤ect ?rms? decisions to participate in joint projects. We show that a high quality partner may not be preferable to a low quality partner, and that a high reputation partner is not necessarily preferable to a low reputation partner. JEL codes: L14, L15, L24, D82, D85

Suggested Citation

  • Costa, Luis Almeida e & Vasconcelos, Luis, 2008. "Share the Fame or Share the Blame? The Reputational Implications of Partnerships," FEUNL Working Paper Series wp539, Universidade Nova de Lisboa, Faculdade de Economia.
  • Handle: RePEc:unl:unlfep:wp539
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    References listed on IDEAS

    as
    1. Milgrom, Paul & Roberts, John, 1996. "The LeChatelier Principle," American Economic Review, American Economic Association, pages 173-179.
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    7. Günther Lang, 2003. "Reputation deals: A theory of endogenous teams," Atlantic Economic Journal, Springer;International Atlantic Economic Society, pages 32-50.
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    9. Miklos-Thal, Jeanine, 2008. "Linking Reputations: The Signaling and Feedback Effects of Umbrella Branding," MPRA Paper 11045, University Library of Munich, Germany.
    10. Atsushi Kajii, "undated". "The Sequential Regularity of Competitive Equilibria and Sunspots," Penn CARESS Working Papers e2d9482c0b44fc6a481e83aae, Penn Economics Department.
    11. Luis M.B. Cabral, 2000. "Stretching Firm and Brand Reputation," RAND Journal of Economics, The RAND Corporation, pages 658-673.
    12. Johannes Hörner, 2002. "Reputation and Competition," American Economic Review, American Economic Association, pages 644-663.
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    Citations

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    Cited by:

    1. Marc-Arthur Diaye & Nathalie Greenan & Sanja Pekovic, 2014. "Sharing the " Fame " of Quality Certification: Quality Supply Chain Effects Evidence
      [Partager la « réputation » de la certification qualité : l’identification d’un effet de chaîne d’appr
      ," Post-Print halshs-01362467, HAL.
    2. Enrico Sette, 2009. "Sorting, reputation and entry in a market for experts," Temi di discussione (Economic working papers) 727, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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