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Consider a two-product firm that decides on the quality of each product. Product quality is unknown to consumers. If the firm sells both products under the same brand name, consumers adjust their beliefs about quality subject to the performance of both products. We show that if the probability...
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has established a reputation for delivering high quality vis-à-vis the supplier. The supplier may enter the market by … initially renting the downstream rm s reputation. The downstream rm may optimally source its input externally, even though … reputation, it may su¤er from a reputational barrier to entry arising from higher input costs. …
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downstream …rm has established a reputation for delivering high quality vis-à-vis the supplier. The supplier may enter the … market by initially renting the downstream …rm’s reputation. The downstream …rm may optimally source its … in the downstream market may lack reputation, it may su¤er from a reputational barrier to entry arising from …
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In a market environment with random detection of product quality, a firm can employ umbrella branding as a strategy to convince consumers of the high quality of its products. Alternatively, a firm can rely on external certification of the quality of one or both of its products. We characterize...
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In a standard adverse selection world, asymmetric information about product quality leads to quality deterioration in the market. Suppose that a higher investment level makes the realization of high quality more likely. Then, if consumers observe the investment (but not the realization of...
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