Evans, Robert; Guinnane, Timothy W. - Cowles Foundation for Research in Economics, Yale University - 2007
Collective reputation and its associated free-rider problem have been invoked to justify state licensing of professions …-improving collective reputation among groups of heterogeneous producers. If the regulator or franchisor cannot credibly commit to high … quality then a common reputation can be created only if the groups are not too different and if marginal cost is declining …