The Economics of Collective Brands

27 Pages Posted: 17 Dec 2008

See all articles by Arthur Fishman

Arthur Fishman

Bar-Ilan University - Department of Economics

Israel Finkelshtain

Hebrew University of Jerusalem

Nira Yacouel

affiliation not provided to SSRN

Avi Simhon

Hebrew University of Jerusalem

Multiple version iconThere are 2 versions of this paper

Date Written: December 17, 2008

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.

Keywords: Collective Brands Reputation

JEL Classification: L15, L43

Suggested Citation

Fishman, Arthur and Finkelshtain, Israel and Yacouel, Nira and Simhon, Avi, The Economics of Collective Brands (December 17, 2008). Available at SSRN: https://ssrn.com/abstract=1317262 or http://dx.doi.org/10.2139/ssrn.1317262

Arthur Fishman

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
972-3-531-8366 (Phone)
972 3 535 3180 (Fax)

Israel Finkelshtain

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem 91905, Jerusalem 91905
Israel
+08-9489255 (Phone)

Nira Yacouel

affiliation not provided to SSRN ( email )

Avi Simhon (Contact Author)

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem 91905, Jerusalem 91905
Israel
+972 2 588 3237 (Phone)
+972 2 581 6071 (Fax)

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