Contribution in edited book
Certification as Solution to the Asymmetric Information Problem?



Publication Details
Authors:
von Wangenheim, G.
Editor:
Rott, Peter
Publisher:
Springer International Publishing
Place:
Cham
Publication year:
2019
Pages range:
11-22
Book title:
Certification - Trust, Accountability, Liability
Title of series:
Studies in European Economic Law and Regulation
Number in series:
16
Volume number:
16
ISBN:
978-3-030-02498-7
Languages:
English

Abstract

This chapter provides an overview of the economic theory of
certification as a solution to the informational problems of experience
and credence goods. It starts with a non-technical presentation of the
basic economic model of certification based on a paper by Kip Viscusi
and then dwells on its variations: If one acknowledges that certifiers
themselves produce an experience or credence good, it becomes obvious
that certifiers are susceptible to the same temptations to hide or even
falsify information as the producers of the underlying experience or
credence goods. Certification of only a minimum quality is shown to be a
possible market equilibrium with negative effects on the spread of
qualities offered on the market. Heterogeneity of consumer preferences
is reported as one of the sources that may increase information
asymmetries between consumers and the certification agencies in the
model. Finally, the chapter takes a brief look at the structure of the
market for certifiers.



Authors/Editors

Last updated on 2019-18-11 at 13:12