nep-ind New Economics Papers
on Industrial Organization
Issue of 2007‒12‒19
two papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Umbrella Branding and External Certification By Hakenes, Hendrik; Peitz, Martin
  2. Deregulation of Business By Yakovlev, Evgeny; Zhuravskaya, Ekaterina

  1. By: Hakenes, Hendrik; Peitz, Martin
    Abstract: In a market environment with random detection of product quality, a firm can employ umbrella branding as a strategy to convince consumers of the high quality of its products. Alternatively, a firm can rely on external certification of the quality of one or both of its products. We characterize equilibria in which umbrella branding fully or partially substitutes for external certification. We also show that the potential to signal quality is improved if consumers condition their beliefs on the source of information, namely whether information comes from external certification or from random detection.
    Keywords: certification; signalling; umbrella branding
    JEL: D82 L14 L15 M37
    Date: 2007–12
  2. By: Yakovlev, Evgeny; Zhuravskaya, Ekaterina
    Abstract: What determines the enforcement of deregulation reform of business activities? What are the outcomes of deregulation? We address these questions using an episode of a drastic reform in Russia between 2001 and 2004 which liberalized registration, licensing, and inspections. Based on the analysis of micro-level panel data on regulatory burden, we find that: 1) On average, the reform reduced the administrative costs of firms; but, the progress of reform had a substantial geographical variation. 2) The enforcement of deregulation reform was better in regions with a transparent government, low corruption, better access of the public to independent media sources, a powerful industrial lobby, and stronger fiscal autonomy. 3) Using the exogenous variation in regulation generated by the interaction of reform and its institutional determinants, we find a substantial positive effect of deregulation on net entry and small business employment and no effect on pollution and public health. The results support public choice theory of the nature of regulation and are inconsistent with the predictions of public interest theory.
    Keywords: Deregulation; Enforcement; Entry; Public choice; Reform; Regulation; Transparency
    JEL: H10 K2 K20 L50
    Date: 2007–12

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