The quality of many goods and services may change randomly between the time of shipment and delivery, creating disputes over quality that can result in lemons-market equilibria. We investigate the potential of third-party inspections for such inefficiencies. We consider two types of inspection,...

The quality of many goods and services may change randomly between the time of shipment and delivery, creating disputes over quality that can result in lemons-market equilibria. We investigate the potential of third-party inspections for such inefficiencies. We consider two types of inspection,...

Many goods and services are subject to random changes in quality during the time between sale and delivery, resulting in markets characterized by lemons-market equilibria. We examine two forms of costly verification, ex post inspection and ex ante certification. In equilibrium, ex post...