Certification and Market Transparency

Arbeitspapier

We provide elementary insights into the effectiveness of certification to increase market transparency. In a market with opaque product quality, sellers use certification as a signaling device, while buyers use it as an inspection device. This difference alone implies that seller-certification yields more transparency and higher social welfare. Under buyer-certification profit maximizing certifiers further limit transparency, but because seller-certification yields larger profits, active regulation concerning the mode of certification is not needed. These findings are robust and widely applicable to, for instance, patents, automotive parts, and financial products.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series ; No. 14-26

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; Information and Product Quality; Standardization and Compatibility
• Subject: Market Transparency ; Certification ; Information and Product Quality ; Asymmetric Information

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stahl, Konrad ; Strausz, Roland
• Event: Veröffentlichung
• (who): University of Mannheim, Department of Economics
• (where): Mannheim
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/129579
• URN: urn:nbn:de:bsz:180-madoc-372764
• Last update: 10.03.2025, 11:46 AM CET