Optimal Quality Certification

Andriy Zapechelnyuk

American Economic Review: Insights, 2020, vol. 2, issue 2, 161-76

Abstract: 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)
Date: 2020
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Citations: View citations in EconPapers (15)

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DOI: 10.1257/aeri.20190387

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