The Value of Delegated Quality Control
| Autor: | Alexander E. Saak |
|---|---|
| Rok vydání: | 2017 |
| Předmět: |
Economics and Econometrics
Delegation Moral hazard media_common.quotation_subject 05 social sciences Control (management) Agency cost General Business Management and Accounting Economies of scale Microeconomics Accounting 0502 economics and business Collusion Repeated game Economics Quality (business) 050207 economics 050205 econometrics media_common |
| Zdroj: | The Journal of Industrial Economics. 65:309-335 |
| ISSN: | 0022-1821 |
| DOI: | 10.1111/joie.12138 |
| Popis: | This paper studies the case in which a firm delegates quality control to an independent monitor. In a repeated game, consumers’ trust provides incentives to acquire information about whether the good is defective, and withhold defective goods from sale. If third-party reports are observable to consumers, delegation lessens the first and dispenses with the second moral hazard concern but also creates agency costs. Internal quality control is optimal only if trades are sufficiently frequent and consumer information is sufficiently precise. This result holds in the presence of the possibility of collusion, fully non-verifiable presale information, and economies of scale in external quality control. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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