Trusting Labels: A Matter of Numbers?

Liebi, Thomas (February 2002). Trusting Labels: A Matter of Numbers? (Diskussionsschriften 02-01). Bern: Universität Bern Volkswirtschaftliches Institut

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Labelling is an increasingly popular way to deal with the problem of non-observability of quality inherent in the consumption of credence goods. I present a model in which the number of labelled products a monopolist offers serves as a signal for the non-observable endogenous quality. An increase in the number of labelled products increases the risk of losing consumer trust by increasing the possibility of detecting wrong labels. This lowers the incentive to produce low quality in the first place.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Theory

UniBE Contributor:

Liebi, Thomas

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Diskussionsschriften

Publisher:

Universität Bern Volkswirtschaftliches Institut

Language:

English

Submitter:

Aline Lehnherr

Date Deposited:

15 Apr 2020 11:55

Last Modified:

06 Aug 2020 14:18

JEL Classification:

L15, D82, M37

BORIS DOI:

10.7892/boris.142430

URI:

https://boris.unibe.ch/id/eprint/142430

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