English
Within a vertical relationship between a producer and a retailer we study each side's incentives to certify the quality of a product. Without certification, consumers are not informed about quality. We show that this certification issue generates new conflicts between producer and vendor. They agree neither on the level of certification, nor on who should certify. These conflicts result from a combination of a hold-up problem and a disclosure issue (a firm might prefer to hide its quality).
Keywords
- quality
- signaling
- certification
- vertical relationships
