Optimal quality certification
Abstract
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.
Citation
Zapechelnyuk , A 2020 , ' Optimal quality certification ' , American Economic Review: Insights , vol. 2 , no. 2 , pp. 161-176 . https://doi.org/10.1257/aeri.20190387
Publication
American Economic Review: Insights
Status
Peer reviewed
ISSN
2640-205XType
Journal article
Rights
Copyright 2020 American Economic Association. All rights reserved. This work has been made available online in accordance with publisher policies or with permission. Permission for further reuse of this content should be sought from the publisher or the rights holder. This is the author created accepted manuscript following peer review and may differ slightly from the final published version. The final published version of this work is available at https://doi.org/10.1257/aeri.20190387
Description
Financial support from the Economic and Social Research Council Grant ES/N01829X/1 is gratefully acknowledged.Collections
Items in the St Andrews Research Repository are protected by copyright, with all rights reserved, unless otherwise indicated.