Strategic certification and provision of quality

Gian Luigi Albano, Alessandro Lizzeri

Research output: Contribution to journalArticle

45 Scopus citations

Abstract

We study the effect of the presence of a certification intermediary in an environment where information asymmetries are particularly severe. The intermediary improves the information that buyers have about quality. This in turn increases the incentives that the seller has to provide high-quality goods. Efficiency is increased by the presence of the intermediary, but quality is underprovided in equilibrium relative to full information. The intermediary can implement the optimal policy in many ways. The amount of information revealed ranges from full disclosure to partial, noisy disclosure.

Original languageEnglish (US)
Pages (from-to)267-283
Number of pages17
JournalInternational Economic Review
Volume42
Issue number1
DOIs
StatePublished - Feb 2001

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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