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Viscusi (1978) shows how, in markets with quality uncertainty, perfect certification results in separation from top … down due to an unraveling process similar to Akerlof (1970). De and Nabar (1991) argue that imperfect certification …' buying decision explicitly, a separating equilibrium with imperfect certification does exist. …
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It is often argued that certifiers have an incentive to offer inflated certificates, although they deny it. In this paper, we study a model in which a certifier is paid by sellers, and may offer them inflated certificates, but incurs costs if doing so. We find that the certifier may face a...
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