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Branding and Collusion in Vertically Differentiated Industries

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  • Garcia, Daniel

Abstract

This paper presents a model of collusion in vertically differentiated industries where firms have the option to make their products distinguishable to consumers by attaching a brand. We show that if consumers’ preferences are linear in the quality dimension and their beliefs satisfy a standard refinement, collusion is facilitated in the absence of brands. More precisely, we show that if collusion is feasible with brands it is also feasible without them

Suggested Citation

  • Garcia, Daniel, 2014. "Branding and Collusion in Vertically Differentiated Industries," MPRA Paper 54010, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:54010
    as

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    References listed on IDEAS

    as
    1. Hakenes, Hendrik & Peitz, Martin, 2008. "Umbrella branding and the provision of quality," International Journal of Industrial Organization, Elsevier, vol. 26(2), pages 546-556, March.
    2. Maria Luz Loureiro & Jill J. McCluskey, 2000. "Assessing consumer response to protected geographical identification labeling," Agribusiness, John Wiley & Sons, Ltd., vol. 16(3), pages 309-320.
    3. Janssen, Maarten C.W. & Roy, Santanu, 2010. "Signaling quality through prices in an oligopoly," Games and Economic Behavior, Elsevier, vol. 68(1), pages 192-207, January.
    4. Heski Bar-Isaac, 2003. "Reputation and Survival: Learning in a Dynamic Signalling Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 231-251.
    5. Arthur Fishman & Israel Finkelstein & Avi Simhon & Nira Yacouel, 2010. "The Economics of Collective Brands," Working Papers 2010-11, Bar-Ilan University, Department of Economics.
    6. Andersson, Fredrik, 2002. "Pooling reputations," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 715-730, May.
    7. Steven Tadelis, 1999. "What's in a Name? Reputation as a Tradeable Asset," American Economic Review, American Economic Association, vol. 89(3), pages 548-563, June.
    8. Jehiel, Philippe, 1992. "Product differentiation and price collusion," International Journal of Industrial Organization, Elsevier, vol. 10(4), pages 633-641, December.
    9. James W. Friedman & Jacques-Francois Thisse, 1993. "Partial Collusion Fosters Minimum Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 24(4), pages 631-645, Winter.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Collusion; Branding; Vertical Differentiation;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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