Strategic Certification and Provision of Quality

@inproceedings{Albano2001StrategicCA,
  title={Strategic Certification and Provision of Quality},
  author={Gian Luigi Albano and Alessandro Lizzeri},
  year={2001}
}
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… CONTINUE READING

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