Abstract

http://ssrn.com/abstract=1907227
 


 



Monopoly versus Competitive Leveraging of Reputation through Umbrella Pricing


Eric Bennett Rasmusen


Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

March 18, 2011


Abstract:     
The Klein-Leffler model explains how the benefit of future reputation can induce firms to produce high quality experience goods, either in a monopoly or an industry with competing firms. We show that reputation can be leveraged across products, but only by a firm with a monopoly on at least one product. Such a firm, however, may be able to capture the market for a competitive product by using umbrella pricing to make higher quality more credible than for firms without a monopoly base. Such monopoly extension increases social welfare, and can even benefit consumers, despite the increase in price. The expanding monopolist does not need to use bundling, and consumers are left better off, but otherwise this looks like classic monopoly leverage.

Number of Pages in PDF File: 24

Keywords: Product quality, umbrella branding, economies of scope, reputation

JEL Classification: D43, K21

working papers series


Download This Paper

Date posted: August 9, 2011  

Suggested Citation

Rasmusen, Eric Bennett, Monopoly versus Competitive Leveraging of Reputation through Umbrella Pricing (March 18, 2011). Available at SSRN: http://ssrn.com/abstract=1907227 or http://dx.doi.org/10.2139/ssrn.1907227

Contact Information

Eric Bennett Rasmusen (Contact Author)
Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )
Enter your address line 1 here
Enter your address line 2 here
Bloomington, IN Enter your state here 47405
United States
812-855-9219 (Phone)
812-855-3354 (Fax)
HOME PAGE: http://rasmusen.org

Feedback to SSRN


Paper statistics
Abstract Views: 464
Downloads: 86
Download Rank: 171,850
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.218 seconds