@techreport{Hakenes2004Umbrella,
abstract = {Consider a two-product firm that decides on the quality of each product. Product quality is
unknown to consumers. If the firm sells both products under the same brand name, consumers
adjust their beliefs about quality subject to the performance of both products. We show that if
the probability that low quality will be detected is in an intermediate range, the firm produces
high quality under umbrella branding whereas it would sell low quality in the absence of
umbrella branding. Hence, umbrella branding mitigates the moral hazard problem. We also
find that umbrella branding survives in asymmetric markets and that even unprofitable
products may be used to stabilize the umbrella brand. However, umbrella branding does not
necessarily imply high quality; the firm may choose low-quality products with positive
probability.},
author = {Hendrik Hakenes and Martin Peitz},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D82; L14; M37; L15; 330; umbrella branding; reputation transfer; signaling; experience goods; Absatzkooperation; Produktqualit\"{a}t; Markenartikel; Produktimage; Signalling; Asymmetrische Information; Moral Hazard},
language = {eng},
number = {1373},
title = {Umbrella branding and the provision of quality},
type = {CESifo working papers},
url = {http://hdl.handle.net/10419/18736},
year = {2004}
}
