Quality Signaling through Certification in Developing Countries

Auriol, Emmanuelle and Schilizzi, Steven G. M. (2015) Quality Signaling through Certification in Developing Countries. Journal of Development Economics, 116. pp. 105-121.

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Official URL: http://tse-fr.eu/pub/29159

Abstract

This paper studies how signaling the credence attributes of consumer goods distorts their market equilibrium in developing countries. Costs of certification, sunk in order to achieve credibility, play a key role 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.

Item Type: Article
Language: English
Date: September 2015
Refereed: Yes
Place of Publication: amsterdam
Uncontrolled Keywords: credence good, quality signaling, certification, developing countries, seeds
JEL codes: D11 - Consumer Economics - Theory
D21 - Firm Behavior
L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
L15 - Information and Product Quality; Standardization and Compatibility
Subjects: B- ECONOMIE ET FINANCE
B- ECONOMIE ET FINANCE > B2- Production. Travail
B- ECONOMIE ET FINANCE > B4- Commerce et Affaire
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 28 May 2015 11:50
Last Modified: 22 Mar 2019 14:18
OAI ID: oai:tse-fr.eu:29159
URI: http://publications.ut-capitole.fr/id/eprint/16858

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