Informative Certification: Screening vs. Acquisition

Gorkem Celik and Roland Strausz

No 104, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: This paper studies monopolistic certification in markets where sellers possess partial private information about product quality. A certifier can provide information through two channels: screening sellers’ private information (soft information) and acquiring new quality data (hard information). We prove that any certification menu achieving less than maximal screening is Pareto dominated by one with full screening. Among Pareto-efficient menus, the certifier’s profit-maximising menu provides maximal soft information while restricting hard information provision. The two channels diverge because screening creates value the certifier can fully capture, whereas hard information amplifies costly information rents. Using power value functions, we derive comparative statics showing that information restrictions target low-quality sellers when information value is moderate, but high-quality sellers receive perfect quality revelation when information value is high.

Keywords: certification; disclosure; screening; information acquisition; monopolistic distortions (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2026-07-13
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0104

DOI: 10.48462/opus4-6298

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