Quality Signaling through Certification in Developing Countries

Emmanuelle Auriol and Steven G.M. Schilizzi

Working Paper from Agence française de développement

Abstract: This paper studies how the signaling of the credence attributes of consumer goods distorts their market equilibrium in developing countries. Costs of certification, sunk in order to achieve credibility, play a keyrole in producing an oligopolistic market, leading to high prices that form a barrier for consumers in the South. To lower the cost, certification is better achieved by a single independent body which can be financed either by end consumers, through a fee, or by public subsidies. The paper identifies the conditions under which each funding mechanism is most efficient, taking into account the government's budget constraint. The theoretical analysis is motivated with reference to agricultural seed certification.

JEL-codes: Q (search for similar items in EconPapers)
Pages: 53
Date: 2017-11-29
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Published in Research Papers

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Related works:
Journal Article: Quality signaling through certification in developing countries (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:avg:wpaper:en7730

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