Quotation of the Day…

(Don Boudreaux)

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… is from page 389 of the late, great UCLA economists Armen Alchian’s and William R. Allen’s Universal Economics (2018; Jerry L. Jordan, ed.); this volume is an updated version of Alchian’s and Allen’s magnificent and pioneering earlier textbook, University Economics:

Your reputation is the public’s belief about your expected future behavior. A firm’s good reputation can be a powerful enforcer of its own reliable behavior, lest it lose future earnings. A seller’s good reputation is valuable also to potential customers because it reduces shoppers’ costs of identifying reliable sellers.

DBx: Yep.

Keep this simple but important fact in mind when you next encounter someone asserting that brand names are a capitalist plot to enrich firms at the expense of consumers.