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Reputational economies of scale
International Review of Law and Economics ( IF 1.216 ) Pub Date : 2020-11-20 , DOI: 10.1016/j.irle.2020.105965
Daniel Klerman , Miguel F.P. de Figueiredo

For many years, most scholars have assumed that the strength of reputational incentives is positively correlated with firm size. Firms that sell more products or services were thought more likely to be trustworthy than those that sell less because larger firms have more to lose if consumers decide they have behaved badly. That assumption has been called into question by recent work that shows that, under the standard infinitely repeated game model of reputation, reputational economies of scale will occur only under special conditions, such as monopoly, because larger firms not only have more to lose from behaving badly, but also more to gain. This article shows that reputational economies of scale exist even when there is competition and without other special conditions, if the probability that low quality is detected is positively correlated with the quantity of the good or service sold. It also shows that reputational economies of scale exist, under some circumstances, in a finite-horizon model of reputation. Reputational economies of scale help explain why law and accounting firms can act as gatekeepers, why mass market products are more likely to be safe, why firms are less likely to exploit one-sided contracts than consumers, and why manufacturers market new products under the umbrella of established trademarks.



中文翻译:

声誉规模经济

多年来,大多数学者一直认为声誉激励的强度与企业规模成正相关。人们认为,销售更多产品或服务的公司比销售更少产品或服务的公司更有可能值得信赖,因为如果消费者认为自己的行为不当,大公司将蒙受更多损失。最近的工作对这一假设提出了质疑,该研究表明,在标准的无限重复声誉博弈模型下,声誉规模经济只会在诸如垄断的特殊条件下发生,因为大型企业不仅会从行为中遭受更多损失不好,但也有更多收获。本文表明,即使存在竞争且没有其他特殊条件,声誉规模经济仍然存在,如果检测到低质量的可能性与所售商品或服务的数量成正相关。它还表明,在某些情况下,声誉的规模经济存在于声誉的有限水平模型中。声誉规模经济有助于解释为什么法律和会计师事务所可以充当看门人,为什么大众市场产品更安全,为什么企业比消费者更不可能利用单面合同,以及制造商为什么在伞下销售新产品既定商标。

更新日期:2021-01-16
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