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Optimal Quality Certification

Author

Listed:
  • Andriy Zapechelnyuk

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 and pass-fail rules, are optimal. Our solution method involves interpreting the certification problem as a delegation problem.

Suggested Citation

  • Andriy Zapechelnyuk, 2020. "Optimal Quality Certification," American Economic Review: Insights, American Economic Association, vol. 2(2), pages 161-176, June.
    • Handle: RePEc:aea:aerins:v:2:y:2020:i:2:p:161-76
    DOI: 10.1257/aeri.20190387
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    Citations

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    Cited by:

    1. Jacopo Bizzotto & Adrien Vigier, 2022. "A Case for Tiered School Systems," Working Papers 202205, Oslo Metropolitan University, Oslo Business School.
    2. Lin, Tse-Chun & Pursiainen, Vesa, 2022. "Regional social capital and moral hazard in crowdfunding," Journal of Business Venturing, Elsevier, vol. 37(4).
    3. Gerardi, Dino & Grillo, Edoardo & Monzón, Ignacio, 2022. "The perils of friendly oversight," Journal of Economic Theory, Elsevier, vol. 204(C).
    4. Tan, Teck Yong, 2023. "Optimal transparency of monitoring capability," Journal of Economic Theory, Elsevier, vol. 209(C).
    5. Jacopo Bizzotto & Eduardo Perez-Richet & Adrien Vigier, 2020. "Communication via Third Parties," Working Papers 202006, Oslo Metropolitan University, Oslo Business School.
    6. Emir Kamenica & Kyungmin Kim & Andriy Zapechelnyuk, 2021. "Bayesian persuasion and information design: perspectives and open issues," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 72(3), pages 701-704, October.
    7. Wipusanawan, Chayanin, 2023. "Standard-essential patents, innovation, and competition," Other publications TiSEM 292e319a-9e6a-4465-8f8f-7, Tilburg University, School of Economics and Management.
    8. Jacopo Bizzotto & Adrien Vigier, 2022. "Sorting and Grading," Papers 2208.10894, arXiv.org, revised Feb 2024.
    9. Jacopo Bizzotto & Alessandro De Chiara, 2022. "Frequent audits and honest audits," UB School of Economics Working Papers 2022/417, University of Barcelona School of Economics.
    10. Hu, Ju & Zhou, Zhen, 2022. "Disclosure in epidemics," Journal of Economic Theory, Elsevier, vol. 202(C).
    11. Maryam Saeedi & Ali Shourideh, 2020. "Optimal Rating Design under Moral Hazard," Papers 2008.09529, arXiv.org, revised Jul 2023.
    12. Sergio Cappellini, 2022. "Optimal Unemployment Insurance with Worker Profiling," "Marco Fanno" Working Papers 0294, Dipartimento di Scienze Economiche "Marco Fanno".

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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