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Umbrella branding and external certification

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Author Info
Hakenes, Hendrik
Peitz, Martin

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Abstract

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 equilibria in which umbrella branding fully or partially substitutes for external certification. We also show that the potential to signal quality is improved if consumers condition their beliefs on the source of information, namely whether information comes from external certification or from random detection.

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File URL: http://www.sciencedirect.com/science/article/B6V64-4S50K81-1/2/71c54ea8c2ec5e80e41cb868a4950f32
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Publisher Info
Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 53 (2009)
Issue (Month): 2 (February)
Pages: 186-196
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:eee:eecrev:v:53:y:2009:i:2:p:186-196

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Related research
Keywords: Umbrella branding Certification Signalling;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Andersson, Fredrik, 2002. "Pooling reputations," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 715-730, May. [Downloadable!] (restricted)
  2. Hendrik Hakenes & Martin Peitz, 2004. "Umbrella Branding and the Provision of Quality," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  3. Choi, Jay Pil, 1998. "Brand Extension as Informational Leverage," Review of Economic Studies, Blackwell Publishing, vol. 65(4), pages 655-69, October. [Downloadable!] (restricted)
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  4. Cabral, L.M.B., 2000. "Stretching Firm and Brand Reputation," New York University, Leonard N. Stern School Finance Department Working Paper Seires 00-07, New York University, Leonard N. Stern School of Business-.
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  5. Birger Wernerfelt, 1988. "Umbrella Branding as a Signal of New Product Quality: An Example of Signalling by Posting a Bond," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 458-466, Autumn. [Downloadable!] (restricted)
  6. Cabral, L.M.B., 2001. "Optimal Brand Umbrella Size," New York University, Leonard N. Stern School Finance Department Working Paper Seires 01-06, New York University, Leonard N. Stern School of Business-.
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  7. Gary Biglaiser, 1993. "Middlemen as Experts," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 212-223, Summer. [Downloadable!] (restricted)
  8. Hongbin Cai & Ichiro Obara, 2008. "Firm Reputation and Horizontal Integration," Levine's Bibliography 122247000000002038, UCLA Department of Economics. [Downloadable!]
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This page was last updated on 2009-11-7.

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