- Intermediation Can Replace Certification
AbstractWe consider a market in which producers and an intermediary have perfect information about the qualities of the goods. Consumers do not observe the qualities. Producers can perfectly reveal that a good is of high quality through certification. This entails socially wasteful costs. Firms can choose whether to sell throufh an intermediary jointly or exclusively or to sell independently (vertical integration). We show that multi-brand retailing, which leads to a redistribution of profits but not to social costs, can fully or partially replace certification by signaling product quality.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 1999-04.
Length: 44 pages
Date of creation: Apr 1999
Date of revision:
Publication status: Published by Ivie
Intermediation; Retailing; Quality Certification;
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