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Competition and Misconduct in Certification Markets with Externalities / Nano Barahona, Juan-Pablo Montero, Pedro Skorin.
- Format:
- Book
- Author/Creator:
- Barahona, Nano.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w35422.
- NBER working paper series no. w35422
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2026.
- Summary:
- Vehicle inspections--commonly known as smog and safety checks--are often delegated to private agents, much like other quality certification markets. When these agents compete, they face incentives to misreport quality--especially when consumers do not internalize the external costs of misreporting. Theory and evidence from Chile's concentrated vehicle-inspection markets suggest that these incentives are significant: misreporting emerges as soon as competition is introduced. We find that delegating each market to a single agent proves effective in reducing approval rates, without compromising service quality or the ex-ante competition for the market, while delivering substantial and permanent reductions in vehicle emissions.
- Notes:
- July 2026.
- Print version record
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