IDEAS home Printed from https://ideas.repec.org/p/oml/wpaper/202102.html
   My bibliography  Save this paper

The Choice of Certifier in Endogenous Markets

Author

Listed:
  • Jacopo Bizzotto

    (Oslo Business School - OsloMet)

  • Bård Harstad

    (University of Oslo - Department of Economics)

Abstract

For markets to work, buyers must know when products are of high quality. This paper provides a theoretical framework for studying the consequences of the certifier's identity, the characteristics of the best certifier, and the identity of the equilibrium certifier. A certifier that cares about quality and externalities (such as an NGO) motivates firms to invest in their capacities to provide quality; a certifier concerned with the firms' profits (such as an industry association) motivates more firms to enter the market in the first place. The relative importance of externalities, investments, and entry determines the socially optimal certification authority but also the type of certifier that is most likely to enter in equilibrium. The theory's predictions are empirically testable and shed light on the variety of certifiers across markets and over time.

Suggested Citation

  • Jacopo Bizzotto & Bård Harstad, 2020. "The Choice of Certifier in Endogenous Markets," Working Papers 202102, Oslo Metropolitan University, Oslo Business School.
    • Handle: RePEc:oml:wpaper:202102
    DOI: 10.2139/ssrn.3730508
    as

    Download full text from publisher

    File URL: https://doi.org/10.2139/ssrn.3730508
    Download Restriction: no
    File URL: https://libkey.io/10.2139/ssrn.3730508?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Certification; delegation; entry of firms; investments in quality; private politics;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oml:wpaper:202102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eirik Hanssen (email available below). General contact details of provider: https://edirc.repec.org/data/ohioano.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.