Quacks, lemons, and self regulation: A welfare analysis

@article{Gehrig1995QuacksLA,
  title={Quacks, lemons, and self regulation: A welfare analysis},
  author={Thomas Gehrig and Peter Jost},
  journal={Journal of Regulatory Economics},
  year={1995},
  volume={7},
  pages={309-325}
}
This paper provides a framework in which suppliers of experience goods may find it in their best interests to provide, and enforce, quality standards. The incentives to form self-regulatory organizations are inversely related to ex-ante monitoring costs of the organization, as well as the number of members. This self-regulatory outcome is compared to statutory price and quality regulation. Without informational asymmetries between market participants and the social planer, self-regulatory… CONTINUE READING