American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Optimal Quality Certification
American Economic Review: Insights
vol. 2,
no. 2, June 2020
(pp. 161–76)
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.Citation
Zapechelnyuk, Andriy. 2020. "Optimal Quality Certification." American Economic Review: Insights, 2 (2): 161–76. DOI: 10.1257/aeri.20190387Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- L15 Information and Product Quality; Standardization and Compatibility