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Two-Sided Reputation in Certification Markets
2012
Social Science Research Network
In a market where sellers solicit certification to overcome asymmetric information, we show that the profit of a monopolistic certifier can be hump-shaped in its reputation for accuracy: a higher accuracy attracts high-quality sellers but sometimes repels low-quality sellers. As a consequence, reputational concerns may induce the certifier to reduce information quality, thus depressing welfare. The entry of a second certifier impacts reputational incentives: when sellers only solicit one
doi:10.2139/ssrn.2178119
fatcat:d62ydsv5nzegpifepnsadljyqa