We examine a model of a monopolist selling to two segments of consumers with different preferences for quality. We show that if the firm is unable to price discriminate between the segments, then there is less investment in quality. We find that both consumer segments, and society overall, may...

When an agent faces audiences with heterogeneous preferences, it is non-trivial to determine what a “good” reputation means, and the return to reputation can be a non-monotonic function. We illustrate this through standard IO examples, and discuss some implications for reputation-building in...