Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Intermediation Can Replace Certification

Intermediation Can Replace Certification We consider a market in which consumers do not have perfect information about product quality. Producers can perfectly reveal that a good is of high quality through certification, which entails socially wasteful costs. Firms can choose whether to sell through an intermediary or to sell independently (vertical integration). We show that multibrand retailing, which leads to a redistribution of profits but not to social costs, can fully or partially replace certification by signaling product quality. Renting the image of a competing high‐quality brand is shown to be an outcome that can be sustained through intermediation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economics & Management Strategy Wiley

Intermediation Can Replace Certification

Download PDF
24 pages

Loading next page...
 
/lp/wiley/intermediation-can-replace-certification-l0dsVFizzr

References (24)

Publisher
Wiley
Copyright
Copyright © 2000 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1058-6407
eISSN
1530-9134
DOI
10.1111/j.1430-9134.2000.00001.x
Publisher site
See Article on Publisher Site

Abstract

We consider a market in which consumers do not have perfect information about product quality. Producers can perfectly reveal that a good is of high quality through certification, which entails socially wasteful costs. Firms can choose whether to sell through an intermediary or to sell independently (vertical integration). We show that multibrand retailing, which leads to a redistribution of profits but not to social costs, can fully or partially replace certification by signaling product quality. Renting the image of a competing high‐quality brand is shown to be an outcome that can be sustained through intermediation.

Journal

Journal of Economics & Management Strategy – Wiley

Published: Mar 1, 2000

There are no references for this article.