The Choice of Certifier in Endogenous Markets

42 Pages Posted: 2 Dec 2020 Last revised: 21 Dec 2022

See all articles by Jacopo Bizzotto

Jacopo Bizzotto

Oslo Business School - OsloMet

Bård Harstad

Stanford Graduate School of Business

Date Written: December 20, 2022


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.

Keywords: Certification, delegation, entry of firms, investments in quality, private politics

JEL Classification: G24, L15, L31

Suggested Citation

Bizzotto, Jacopo and Harstad, Bard, The Choice of Certifier in Endogenous Markets (December 20, 2022). Available at SSRN: or

Jacopo Bizzotto (Contact Author)

Oslo Business School - OsloMet ( email )

Pilestredet 35
Oslo, 0166

Bard Harstad

Stanford Graduate School of Business ( email )

655 Knight Way
United States

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