Signaling Quality by Selling Through a Reputable Retailer: An Example of Renting the Reputation of Another Agent

This paper gives an example of renting the reputation of another agent to signal quality. We show that in a “maximally” separating equilibrium, manufacturers of high quality products distribute through retailers with strong reputation (reputable retailers), while manufacturers of low quality products distribute through retailers with no reputation (discounters). In this way, even if high quality manufacturers have no reputation of their own to post as bond, they can signal quality by posting the reputation of the retailers. In equilibrium, reputable retailers never default on their reputation. We also show that it pays the retailers to invest in reputation, as reputable retailers earn profits bounded away from zero under endogenous sequential entry, while the discounters' profits are zero.channels of distribution, signaling game, retailing, quality perception, product quality

India

This paper explores the Indian adjustment program of 1991/92 and its initial results. The contents include long-term growth trends for output, investment, and macroeconomic condition; education, labor employment, and poverty; growth, accumulation, and productivity; results of India-specific studies; the stabilization and adjustment strategy; the response to the reforms; the impact on unemployment and poverty; the behavior of private investment; fiscal adjustment and reform; recent experience with a surge in capital inflows: overall trends, the investor base, comparison with other countries, and factors behind the flows; the impact on the economy; the sustainability of capital flows; and structural reforms and the implications for investment and growth; trade reform; the investment regime; public enterprise reform; and financial market reform.

Renting Goodwill in International Marketing Channels: An Analysis of Pricing Strategies and Bargaining Power

This paper investigates the pricing decisions of foreign manufacturers in international markets within a bargaining framework with asymmetric information and the rental of goodwill. The key findings are: first, the foreign manufacturer follows a mark-up pricing strategy in which its gross margin and the quality premium over the domestic product are shared with the importer. Second, a manufacturer–importer contract occurs only when the manufacturer’s bargaining power is within an admissible range which shrinks as transaction costs increase. Third, the domestic consumer will only purchase the foreign product if the importer’s goodwill in the domestic market is sufficiently large to signal quality. The paper contributes to the literature on exchange relationships between foreign manufacturers and importers. Copyright International Atlantic Economic Society 2005C70, D40, FO,