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Experience Goods, Umbrella Branding, and Reputation

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  • J.-P. Niinimäki

    (University of Turku)

Abstract

This paper examines umbrella brands—brand stretching or brand extension—in a model of experience goods and an infinite number of periods. A monopoly firm has short-run incentives to compromise on product quality so as to save costs, as buyers can observe quality only ex post. The paper shows that the overlapping structure of product launching strengthens umbrella branding, mitigates moral hazard, and makes easier the building of a good reputation and its maintenance. The overlapping structure generates switching costs between strategies.

Suggested Citation

  • J.-P. Niinimäki, 2023. "Experience Goods, Umbrella Branding, and Reputation," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(1), pages 33-44, February.
    • Handle: RePEc:kap:revind:v:62:y:2023:i:1:d:10.1007_s11151-022-09885-8
    DOI: 10.1007/s11151-022-09885-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Brands; Bundling; Experience goods; Reputation; Tying;
    All these keywords.

    JEL classification:

    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing

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