Is quality accreditation effective? Evidence from the childcare market

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Abstract

The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers.

Original languageEnglish (US)
Pages (from-to)708-721
Number of pages14
JournalInternational Journal of Industrial Organization
Volume28
Issue number6
DOIs
Publication statusPublished - Nov 2010

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Keywords

  • Certification
  • Child care
  • Information
  • Quality

ASJC Scopus subject areas

  • Industrial and Manufacturing Engineering
  • Industrial relations
  • Strategy and Management
  • Aerospace Engineering

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