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Can Quality Certification Lead to Stable Cartels?

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Abstract

Cartel stability is investigated in a context of adverse selection whereconsumers are imperfectly informed about product quality. Producer collusionmay be necessary to signal quality via third-party certification. Whileexamining different cost structures for third-party certification, we showthat a stable cartel that provides information about product quality mayimprove overall welfare even if producers collude to reduce competition.

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Authors and Affiliations

  1. Department of Agricultural Economics, Kansas State University, USA

    John M. Crespi

  2. UMR Economie Publique INRA-INAPG, Paris

    Stéphan Marette

Authors
  1. Stéphan Marette
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  2. John M. Crespi
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Marette, S., Crespi, J.M. Can Quality Certification Lead to Stable Cartels?. Review of Industrial Organization 23, 43–64 (2003). https://doi.org/10.1023/B:REIO.0000005595.35570.1a

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  • DOI: https://doi.org/10.1023/B:REIO.0000005595.35570.1a

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