convince consumers of the high quality of its products. Alternatively, a firm can rely on external certification of the quality … external certification. We also show that the potential to signal quality is improved if consumers condition their beliefs on … the source of information, namely whether information comes from external certification or from random detection …

I compare certification and self-regulation, two widely used quality assurance mechanisms in markets where consumers do … not observe the quality of goods. Certification is a mechanism in which an external firm offers a certificate to producers … certification fee. Self-regulation is a mechanism in which a club of firms in the industry adhere (or not) to a self-imposed code of …