Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94058
Authors: 
Strausz, Roland
Year of Publication: 
2004
Series/Report no.: 
SFB/TR 15 Discussion Paper 25
Abstract: 
This paper derives conditions under which reputation enables certifiers to resist capture. These conditions alone have strong implications for the industrial organization of certification markets: 1) Honest certification requires high prices that may even exceed the static monopoly price. 2) Honest certification exhibits economies of scale and constitutes a natural monopoly. 3) Price competition tends to a monopolization. The results derive from a general principle of reputation models that favors concentration. This principle implies benefits from specialization and explains specialized certifiers as efficient market institutions that sell reputation as a service to other firms.
Subjects: 
certification
collusion
bribery
reputation
natural monopoly
JEL: 
L15
D82
L11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.