Working Paper: NBER ID: w26117
Authors: Ruediger Bachmann; Gabriel Ehrlich; Ying Fan; Dimitrije Ruzic; Benjamin Leard
Abstract: This paper uses the 2015 Volkswagen (VW) emissions scandal as a natural experiment to provide evidence that collective reputation externalities are economically significant. Using a combination of difference-in-differences and demand estimation approaches, we document a spillover effect from the scandal to the non-VW German auto manufacturers. The spillover amounts to an average drop of $2,057 in consumer valuations of these manufacturers’ vehicles and to a 34.6% reduction in their annual sales. We substantiate our interpretation that the estimates reflect a reputation spillover using data on internet search behavior and direct measures of consumer sentiment from Twitter.
Keywords: collective reputation; Volkswagen emissions scandal; spillover effects; demand estimation
JEL Codes: D12; D22; D90; L14; L15; L62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Volkswagen emissions scandal (F18) | decline in positive sentiment towards non-Volkswagen German manufacturers (F64) |
| reputational spillover effect (F69) | decline in positive sentiment towards non-Volkswagen German manufacturers (F64) |
| Volkswagen emissions scandal (F18) | consumer behavior towards non-Volkswagen German manufacturers (M37) |
| Volkswagen emissions scandal (F18) | reputational spillover effect (F69) |
| Volkswagen emissions scandal (F18) | sales reduction of non-Volkswagen German manufacturers (L81) |
| reputational spillover effect (F69) | sales reduction of non-Volkswagen German manufacturers (L81) |