Selling Certification of Private and Market Information

Gorkem Celik and Roland Strausz

No 45, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: We consider a monopolistic certifier selling certification services to a partially privately informed seller. The certifier can enable the seller to disclose her private information publicly, as well as gather additional market information about the good's quality publicly. We show that the certifier's optimal contract exhibits maximal disclosure but non-maximal information-gathering. Thus, optimal contracts eliminate private information but not market uncertainty; even though the latter would be costless, it is suboptimal as it requires excessive information rents to the seller. Thus, market inefficiencies remain due to market uncertainty but not due to private information.

Keywords: certification; disclosure; information gathering; optimal information revelation; private information (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2024-08-09
New Economics Papers: this item is included in nep-com, nep-cta, nep-des and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0045

DOI: 10.48462/opus4-5576

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