Optimal Quality Certification
American Economic Review: Insights, 2020, vol. 2, issue 2, 161-76
Quality certification not only informs consumers but also stimulates producers to supply better-quality products. We study a problem of quality certification in a moral hazard setting. We show that, under standard assumptions, simple certification systems, such as quality assurance and pass-fail rules, are optimal. Our solution method involves interpreting the certification problem as a delegation problem.
JEL-codes: D82 L15 (search for similar items in EconPapers)
Note: DOI: 10.1257/aeri.20190387
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Working Paper: Optimal Quality Certification (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:aea:aerins:v:2:y:2020:i:2:p:161-76
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