Raising the Bar: Certification Thresholds and Market Outcomes-Reference-Cited by-同舟云学术

Raising the Bar: Certification Thresholds and Market Outcomes

Published:2023-05-01 Issue:2 Volume:15 Page:599-626
ISSN:1945-7669
Container-title:American Economic Journal: Microeconomics
language:en
Short-container-title:American Economic Journal: Microeconomics

Author:

Hui Xiang¹,Saeedi Maryam²,Spagnolo Giancarlo³,Tadelis Steven⁴

Affiliation:

1. Washington University (email: )

2. Carnegie Mellon University (email: )

3. University of Rome Tor Vergata, EIEF, and CEPR (email: )

4. University of California Berkeley, NBER, and CEPR (email: )

Abstract

Certification of sellers by trusted third parties helps alleviate information asymmetries in markets, yet little is known about the impact of a certification’s threshold on market outcomes. Exploiting a policy change on eBay, we study how a more selective certification threshold affects the distribution of quality and incumbent behavior. We develop a stylized model that shows how changes in selectivity change the distribution of quality and prices in markets. Using rich data from hundreds of online categories on eBay.com , we find support for the model’s hypotheses. Our results help inform the design of certification selectivity in electronic and other markets. (JEL D82, L11, L15, L86)

Publisher

American Economic Association

Subject

General Economics, Econometrics and Finance

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/mic.20210179

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