Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96058
Authors: 
Fishman, Arthur
Finkelstein, Israel
Simhon, Avi
Yacouel, Nira
Year of Publication: 
2010
Series/Report no.: 
Working Papers, Bar-Ilan University, Department of Economics 2010-11
Abstract: 
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.
Document Type: 
Working Paper

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