Optimal quality certification
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Quality certification not only informs consumers, but also stimulates producers to supply better quality products. We study a problem of quality certification in a moral hazard setting. We show that, under standard assumptions, simple certification systems, such as quality assurance rule and pass-fail rule, are optimal. Our solution method involves interpreting the certification problem as a delegation problem.
Zapechelnyuk , A 2019 ' Optimal quality certification ' School of Economics and Finance Discussion Paper , no. 1904 , University of St Andrews , St Andrews .
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