
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 non–trivial analysis revealing a clear intuition. Buyer–induced certification acts as an inspection device, whence seller–induced certification acts 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.
Item Type: | Paper |
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Keywords: | asymmetric information, certi?cation, information acquisition, inspection, lemons, middlemen, signaling |
Faculties: | Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A1 - Allokationsmechanismen in Organisationen und Märkten Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > C6 - Kommunikations- und Transporttechnologien, Industrie- und Regionalstruktur |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | D40, D82, L14, L15 |
URN: | urn:nbn:de:bvb:19-epub-13231-2 |
Language: | English |
Item ID: | 13231 |
Date Deposited: | 10. Jul 2012, 13:07 |
Last Modified: | 04. Nov 2020, 12:53 |