Manufacturer Certification in Second-Hand Markets
We analyse an overlapping generations model of manufacturer certification in durable goods markets with asymmetric information about the quality of used goods. The functioning of second-hand markets has two effects on markets for new goods, a substitution and a resale value effect. Through certification, manufacturers reduce adverse selection in second-hand markets and extract resulting rents through the markets for new goods. Certification may increase profits at the expense of social welfare, by increasing average quality while decreasing trading volume. Manufacturers may be willing to subsidise certification to increase profits on new goods and thus have an advantage over third-party certifiers.
Flavio Toxvaerd is Professor of Economics and Public Policy at the Faculty of Economics, University of Cambridge and a fellow of Clare College. He holds degrees from the University of Copenhagen (BSc Economics, MSc Economics), the London School of Economics (MSc Econometrics and Mathematical Economics), the London Business School (PhD Economics) and the University of Cambridge (PhD Theoretical Epidemiology). His research interests include industrial organisation, competition policy and economic epidemiology. His work has been published in leading journals including the American Economic Review: Insights, Journal of Economic Theory, RAND Journal of Economics, International Economic Review and Journal of Theoretical Biology. He also serves as an Associate Editor for the European Economic Review. He is an Affiliated Researcher at the Bennett Institute for Public Policy and a Research Fellow at the Centre for Economic Policy Research. He is currently the inaugural UKRI Policy Fellow in Competition and Productivity Economics and has also been a member of the Academic Panel, both with the Competition and Markets Authority. He has also served as Senior Economic Advisor to the Review on Antimicrobial Resistance, which was set up by HM Government in collaboration with the Wellcome Trust.
Ph.D. in Economics, University of California at Berkeley.