Market Size, Firm Size and Reputation for Quality

11 Pages Posted: 24 Aug 2024

See all articles by Arthur Fishman

Arthur Fishman

Bar-Ilan University - Department of Economics

Artyom Jelnov

Ariel University

Abstract

We analyze the effect of firm’s size on firm’s ability to establish a reputation forquality. We consider markets in which consumers may be informed about a firm’s pastquality through word of mouth referrals from past customers. In this setting consumersare more likely to become informed the greater the firm’s market share. This leadsto a theory of equilibrium firm size which is consistent with findings that firm sizeincreases with market size (Campbell and Hopenhayn, 2005) and the long tail hypothesis(Anderson, 2008).

Keywords: firm size, market size, reputation for quality

Suggested Citation

Fishman, Arthur and Jelnov, Artyom, Market Size, Firm Size and Reputation for Quality. Available at SSRN: https://ssrn.com/abstract=4935695 or http://dx.doi.org/10.2139/ssrn.4935695

Arthur Fishman (Contact Author)

Bar-Ilan University - Department of Economics ( email )

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

Artyom Jelnov

Ariel University ( email )

Israel

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