 The certifier for the long runJacopo Bizzotto and Bard Harstad International Journal of Industrial Organization, 2023, vol. 87, issue C Abstract: We build a workhorse model to study the optimal and the equilibrium certifier from a long-run perspective. Firms enter the market, and invest in their capacity to provide quality, before the certification threshold is determined. With a certifier that cares about quality and externalities (such as an NGO), the threshold is demanding and the firms’ profits are small. Anticipating this, only a few firms enter the market, and they invest heavily. With a certifier mostly concerned with the firms’ profits (such as an industry association), the results are reversed. The relative importance of externalities, investments, and entry determines the socially optimal certifier identity as well as the type of certifier that is most likely to operate in equilibrium. The theory’s predictions are empirically testable and shed light on the variety of certifiers across markets and over time. Keywords: Certification; Delegation; Entry of firms; Investments in quality; Private politics (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:87:y:2023:i:c:s0167718723000024 DOI: 10.1016/j.ijindorg.2023.102920 Access Statistics for this article International Journal of Industrial Organization is currently edited by P. Bajari, B. Caillaud and N. Gandal More articles in International Journal of Industrial Organization from Elsevier |
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