Location of Repository

“Reputation and Turnover” by

By Rafael Rob and Tadashi SekiguchiRafael Rob and Tadashi Sekiguchi

Abstract

We consider a repeated duopoly game where each firm privately chooses its investment in quality, and realized quality is a noisy indicator of the firm’s investment. We focus on dynamic reputation equilibria, whereby consumers ‘discipline ’ a firmbyswitchingtoitsrivalinthecasethat the realized quality of its product is too low. This type of equilibrium is characterized by consumers ’ tolerance level- the level of product quality below which consumers switch to the rival firm- and firms ’ investment in quality. Given consumers ’ tolerance level, we determine when a dynamic equilibrium that gives higher welfare than the static equilibrium exists. We also derive comparative statics properties, and characterize a set of investment levels and, hence, payoffs that our equilibria sustain

Topics: useful comments. Remaining errors are, regrettably, our own
Year: 2004
OAI identifier: oai:CiteSeerX.psu:10.1.1.195.3959
Provided by: CiteSeerX
Download PDF:
Sorry, we are unable to provide the full text but you may find it at the following location(s):
  • http://citeseerx.ist.psu.edu/v... (external link)
  • http://www.econ.upenn.edu/Cent... (external link)
  • Suggested articles


    To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.