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Optimal Quality Certification†

Optimal Quality Certification† AbstractQuality 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. (JEL D82, L15) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review: Insights American Economic Association

Optimal Quality Certification†

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Publisher
American Economic Association
Copyright
Copyright © 2020 © American Economic Association
ISSN
2640-205X
eISSN
2640-2068
DOI
10.1257/aeri.20190387
Publisher site
See Article on Publisher Site

Abstract

AbstractQuality 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. (JEL D82, L15)

Journal

American Economic Review: InsightsAmerican Economic Association

Published: Jun 1, 2020

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