Restrictions on certifiers' fee structures are irrelevant for maximizing their profits and trade efficiency, and for the implementability of (monotone) distributions of rents. The irrelevance results exploit that certification schemes involve two substitutable dimensions-the fee structure and...

This paper analyzes optimal product lines when consumers differ both in their taste for quality and in their desire for social image. The market outcome features partial pooling and product differentiation that is not driven by heterogeneous valuations for quality but by image concerns. A...

In models of certification possible restrictions on the nature of the fee structures are commonly analyzed. We show that they are irrelevant for the certifier's ability to maximize profits and trade efficiency. Our results establish that certification schemes involve two substitutable...

In Buy-It-Now auctions, sellers can post a take-it-or-leave-it price offer prior to an auction. While the literature almost exclusively looks at buyers in such combined mechanisms, the current paper summarizes results from the sellers' point of view. Buy-It-Now auctions are complex mechanisms...

In this paper we show that informational and real frictions in CDS markets strongly affect CDS premia. We derive this main finding using a proprietary set of individual CDS transactions cleared by the Depository Trust & Clearing Corporation. We first show that CDS traders adjust the CDS premium...

We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel element in the literature on decision rights, we...

In markets with quality unobservable to buyers, third-party certification is often the only instrument to increase transparency. While both sellers and buyers have a demand for certification, its role differs fundamentally: sellers use it for signaling, buyers use it for inspection. Seller...