The Firm as a Pool of Reputations
18 Pages Posted: 9 Sep 1998
Date Written: August 1998
It is shown that reputations, interpreted as assets, satisfy complementarity properties similar to those of physical assets in the property-rights approach to the theory of the firm, and that these complementarities provide a reason for multi-product firms in the absence of technological or organisational economies of scope. The theory is argued to throw light on advertising, brand names and expertise. It is also shown that a reputation for producing high quality of an old good may be necessary to introduce a new good.
JEL Classification: D21, L22
Suggested Citation: Suggested Citation