Collective reputation externalities matter for firms: U.S. sales of the German auto manufacturers (BMW, Mercedes-Benz, Smart) reduced by about 105,000 vehicles worth $5.2 billion following the 2015 Volkswagen emissions scandal.
The decline was principally driven by an adverse reputation spill over, which was reinforced by consumer substitution away from diesel vehicles and was partially offset by substitution away from Volkswagen.
Find out more in this article from Insead Knowledge.
