1997 Reports
Brand Extension as Informational Leverage
The marketing literature refers to the concept of brand capital and provides empirical evidence that firms with a large stock of well established brands have an advantage in introducing new products. This paper develops a theory of brand extension as a mechanism for informational leverage in which a firm leverages off a good's reputation in one market to alleviate the problem of informational asymmetry encountered in other markets. It is shown that brand extension help a multi product monopolist introduce new experience good with less price distortion. Thus, the paper provides a theoretical foundation for the concept of brand capital.
Subjects
Files
- econ_9697_026.pdf application/pdf 1.21 MB Download File
More About This Work
- Academic Units
- Economics
- Publisher
- Department of Economics, Columbia University
- Series
- Department of Economics Discussion Papers, 9697-26
- Published Here
- March 3, 2011
Notes
August 1997