FIN-02-060 |
NYU Stern School of Business |
Limited Partnerships and Reputation Formation
November 2002
Jarl G. Kallberg, Crocker Liu and Anand Srinivasan
ABSTRACT
This paper analyzes the optimal quality decision of a producer in a multi-period setting with
reputation effects. Using a unique database of returns on real estate limited partnerships
(RELPs), we empirically examine alternative theoretical predictions of optimal producer
strategy. In particular, we test whether the producers in our market invest in reputation
building by initially selling high quality goods and then lowering quality. Using a variety of
statistical tests, we find evidence for reputation building, both in the aggregate and for
individual developers.
Jarl G. Kallberg
Institution: Leonard N. Stern School of Business at New York University
Email: jkallber@stern.nyu.edu
Homepage:http://pages.stern.nyu.edu/~jkallber
Crocker Liu
Institution: Stern School of Business, New York University, 44 West 4th Street, New York, NY 10012
Telephone: (212) 998-0353
Fax: (212) 995-4233
Email: cliu@stern.nyu.edu
Homepage:http://www.stern.nyu.edu/~cliu
Anand Srinivasan
Institution: Terry College of Business, Brooks Hall, University of
Georgia, Athens GA, 30602-6253
Email: asriniva@terry.uga.edu
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