On the Signaling and Feedback Effects of Umbrella Branding

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dc.contributor.author THAL, Jeanine
dc.date.accessioned 2007-07-09T15:20:57Z
dc.date.available 2007-07-09T15:20:57Z
dc.date.issued 2007
dc.identifier.issn 1830-7728
dc.identifier.uri http://hdl.handle.net/1814/6930
dc.description.abstract I consider an adverse selection model of product quality to analyze a firm's incentives to sell different products under an umbrella brand. My main result is that umbrella branding can signal positive quality correlation to consumers, even in the absence of any exogenous "technological" correlation between the products concerned. In any equilibrium with positive endogenous quality correlation, the decision to umbrella brand has a positive signaling effect on the price consumers are willing to pay for at least one of the products. Moreover, subsequent successes (failures) of either of the products have positive (negative) feedback effects on the other product. For such equilibria to exist, it is necessary that (i) consumers' prior information about product qualities is limited, (ii)the markets for the different products are sufficiently symmetric, (iii) potential quality differences are substantial, and (iv) firms attach sufficient weight to repeat sales of all products. There are no equilibria in which umbrella branding either fully certifies high quality, or signals negative quality correlation. en
dc.format.extent 457543 bytes
dc.format.mimetype application/pdf
dc.publisher European University Institute
dc.relation.ispartofseries EUI MWP en
dc.relation.ispartofseries 2007/13 en
dc.subject Reputation en
dc.subject Umbrella Branding en
dc.subject Brand Extensions en
dc.subject Product Quality en
dc.subject L14 en
dc.subject L15 en
dc.subject M31 en
dc.title On the Signaling and Feedback Effects of Umbrella Branding en
dc.type Working Paper en
dc.neeo.contributor THAL|Jeanine|aut|
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