Template-Type: ReDIF-Paper 1.0
Title: Quality Signaling through Certification in Developing Countries
Number: b21cacf2-ee84-452f-9e9f-0cff750e7614
Handle: RePEc:avg:wpaper:en7730
Publication-Status: Published in Research Papers
Author-Name: Emmanuelle AURIOL
Author-Name: Steven G.M. SCHILIZZI
Abstract: This paper studies how the signaling of the credence attributes of consumer goods distorts their market equilibrium in developing countries. Costs of certification, sunk in order to achieve credibility, play a keyrole in producing an oligopolistic market, leading to high prices that form a barrier for consumers in the South. To lower the cost, certification is better achieved by a single independent body which can be financed either by end consumers, through a fee, or by public subsidies. The paper identifies the conditions under which each funding mechanism is most efficient, taking into account the government's budget constraint. The theoretical analysis is motivated with reference to agricultural seed certification.
Creation-Date: 2017-11-29
File-URL: https://www.afd.fr/sites/afd/files/2017-12/02-papiers-recherche.pdf
File-Format: Application/pdf
Classification-JEL: Q
Length: 53