Working Paper: CEPR ID: DP15732
Authors: Volker Nocke; Roland Strausz
Abstract: We develop a theory of collective brand reputation for markets in which product quality is jointly determined by local and global players.In a repeated game of imperfect public monitoring, we model collective branding as a pooling of quality signals generated in different markets. Such pooling yields a beneficial informativeness effect for the actions of a global player present in all markets, but also harmful free-riding by local, market-specific players. The resulting tradeoff yields a theory of optimal brand size and revenue sharing, applying to platform markets, franchising, licensing, umbrella branding, and firms with team production.
Keywords: collective branding; reputation; free riding; repeated games; imperfect monitoring
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| collective branding (A30) | informativeness effect (D83) |
| informativeness effect (D83) | product quality (L15) |
| collective branding (A30) | freerider effect (H40) |
| freerider effect (H40) | product quality (L15) |
| optimal revenue sharing (H21) | freerider effect (H40) |
| discount factor (H43) | optimal brand size (L25) |
| optimal brand size (L25) | product quality (L15) |