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The irrelevance of fee structures for certification

Martin Pollrich and Roland Strausz

No 17, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: In models of certification possible restrictions on the nature of the fee structures are commonly analyzed. We show that they are irrelevant for the certifier’s ability to maximize profits and trade efficiency. Our results establish that certification schemes involve two substitutable dimensions—the fee structure and the disclosure rule. In the context of a canonical unit good certification setup, these dimensions act as perfect substitutes for achieving trade efficiency and (monotone) distributions of rents; adjustments in the disclosure dimension can fully mitigate restrictions in the fee dimension, but these changes do affect market transparency.

Keywords: certification; fee structures; disclosure rules; transparency (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2023-05-26
New Economics Papers: this item is included in nep-mic
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Journal Article: The Irrelevance of Fee Structures for Certification (2024) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0017

DOI: 10.48462/opus4-4972

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