Strategic certification and provision of quality

Gian Luigi Albano, Alessandro Lizzeri

    Research output: Contribution to journalArticle

    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 - 2001

    Fingerprint

    Certification
    Intermediaries
    Disclosure
    Information asymmetry
    Incentives
    Seller
    Buyers
    Optimal policy

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Strategic certification and provision of quality. / Albano, Gian Luigi; Lizzeri, Alessandro.

    In: International Economic Review, Vol. 42, No. 1, 2001, p. 267-283.

    Research output: Contribution to journalArticle

    Albano, Gian Luigi ; Lizzeri, Alessandro. / Strategic certification and provision of quality. In: International Economic Review. 2001 ; Vol. 42, No. 1. pp. 267-283.
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