Who should pay for certification?

Stahl, Konrad ; Strausz, Roland

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URL: https://ub-madoc.bib.uni-mannheim.de/29754
Additional URL: http://www.zew.de/de/publikationen/publikation.php...
URN: urn:nbn:de:bsz:180-madoc-297546
Document Type: Working paper
Year of publication: 2011
The title of a journal, publication series: ZEW Discussion Papers
Volume: 11-054
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: D40 , D82 , L14 , L15,
Subject headings (SWD): Normung , Produktqualität , Asymmetrische Information , Kunde , Kosten , Signalling , Kraftfahrzeugindustrie
Keywords (English): asymmetric information , certification , information acquisition , inspection , lemons , middlemen , signaling
Abstract: Who does, and who should initiate costly certification by a third party under asymmetric quality information, the buyer or the seller? Our answer - the seller - follows from a nontrivial analysis revealing a clear intuition. Buyer-induced certification acts as an inspection device, seller-induced certification as a signalling device. Seller-induced certification maximizes the certifier’s profit and social welfare. This suggests the general principle that certification is, and should be induced by the better informed party. The results are reflected in a case study from the automotive industry, but apply also to other markets - in particular the financial market.

Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.

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