Umbrella Branding and the Provision of Quality

Arbeitspapier

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 that low quality will be detected is in an intermediate range, the firm produces high quality under umbrella branding whereas it would sell low quality in the absence of umbrella branding. Hence, umbrella branding mitigates the moral hazard problem. We also find that umbrella branding survives in asymmetric markets and that even unprofitable products may be used to stabilize the umbrella brand. However, umbrella branding does not necessarily imply high quality; the firm may choose low-quality products with positive probability.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: SFB/TR 15 Discussion Paper ; No. 132

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Transactional Relationships; Contracts and Reputation; Networks ; Information and Product Quality; Standardization and Compatibility ; Advertising ; Asymmetric and Private Information; Mechanism Design
• Thema: Umbrella branding ; reputation transfer ; signaling ; experience goods

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Hakenes, Hendrik ; Peitz, Martin
• Ereignis: Veröffentlichung
• (wer): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (wo): München
• (wann): 2006

Weitere Informationen

• DOI: doi:10.5282/ubm/epub.13419
• Handle: http://hdl.handle.net/10419/94062
• URN: urn:nbn:de:bvb:19-epub-13419-0
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ