Market Size, Firm Size and Reputation for Quality
11 Pages Posted: 24 Aug 2024
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: 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
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