Informational Opacity and Honest Certification
This paper studies the interaction of information disclosure and reputational concerns in certification markets. We argue that by revealing less precise information a certifier reduces the threat of capture. Opaque disclosure rules may reduce profits but also constrain feasible bribes. For large discount factors a certifier is unconstrained in the choice of a disclosure rule and full disclosure maximizes profits. For intermediate discount factors, only less precise, such as noisy, disclosure rules are implementable. Our results suggest that contrary to the common view, coarse disclosure may be socially desirable. A ban may provoke market failure especially in industries where certifier reputational rents are low.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Mohrenstraße 58, D-10117 Berlin|
Web page: http://www.diw.de/en
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Antoine Faure-Grimaud & Eloïc Peyrache & Lucía Quesada, 2009.
"The ownership of ratings,"
RAND Journal of Economics,
RAND Corporation, vol. 40(2), pages 234-257.
- Faure-Grimaud, Antoine & Peyrache, Eloïc & Quesada, Lucía, 2005. "The Ownership of Ratings," CEPR Discussion Papers 5432, C.E.P.R. Discussion Papers.
- Mathis, Jérôme & McAndrews, James & Rochet, Jean-Charles, 2009. "Rating the raters: Are reputation concerns powerful enough to discipline rating agencies?," Journal of Monetary Economics, Elsevier, vol. 56(5), pages 657-674, July.
- Langinier Corinne & Babcock Bruce A., 2008. "Agricultural Production Clubs: Viability and Welfare Implications," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 6(1), pages 1-31, December.
- Corinne Langinier & Bruce A. Babcock, 2006. "Agricultural Production Clubs: Viability and Welfare Implications," Center for Agricultural and Rural Development (CARD) Publications 06-wp431, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Langinier, Corinne & Babcock, Bruce A., 2006. "Agricultural Production Clubs: Viability and Welfare Implications," Staff General Research Papers Archive 12670, Iowa State University, Department of Economics.
- Strausz, Roland, 2005. "Honest certification and the threat of capture," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 45-62, February.
- Roland Strausz, "undated". "Honest Certification and the Threat of Capture," Papers 018, Departmental Working Papers.
- Strausz, Roland, 2004. "Honest Certification and the Threat of Capture," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 25, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1291. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.