Product Testing, Seller Disclosure and Certification

50 Pages Posted: 12 Nov 2016 Last revised: 26 Jul 2018

Jacopo Bizzotto

University of Oslo - Department of Economics

Jesper Rüdiger

University of Copenhagen - Department of Economics

Adrien Vigier

University of Oxford - Department of Economics

Date Written: July 1, 2018

Abstract

We study product certification by a certifier basing her decisions on a mixture of information, some of which is voluntarily disclosed by the sellers, and some of which she can acquire first-hand by testing products. We determine the conditions under which products are in fact tested and show that when these conditions hold then access to cheaper and more accurate certifier tests can lower social welfare and certification quality, by crowding out information disclosed by the sellers. Regulators may therefore prefer to license certification to relatively inefficient certification agencies.

Keywords: Certification, Product Testing, Information Acquisition, Information Disclosure

JEL Classification: C72, D82, D83, G24, G28

Suggested Citation

Bizzotto, Jacopo and Rüdiger, Jesper and Vigier, Adrien, Product Testing, Seller Disclosure and Certification (July 1, 2018). Available at SSRN: https://ssrn.com/abstract=2868042 or http://dx.doi.org/10.2139/ssrn.2868042

Jacopo Bizzotto

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

Jesper Rüdiger (Contact Author)

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.
Denmark

Adrien Vigier

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

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