Title: Certification Design in Lemon Market

Speaker: Pei Ting, Lecturer of the School of Economics, Huazhong University of Science and Technology; Doctor of Economics from the National University of Singapore. His research directions include game theory and microeconomic theory, and his academic achievements have been published in top international academic journals such as Games and Economic Behavior and International Journal of Game Theory. He presides over the National Natural Science Foundation Youth Fund.

Abstract: We analyze certification design by a profit-maximizing certifier in the classic lemons market, where certification entails a flexible signal and a flat, upfront fee. Sellers privately observe the quality of their goods, which influences both buyers’ valuations and the sellers’ outside options. We derive a necessary and sufficient condition for the set of implementable payoffs for participating sellers. Applying this result, we characterize the equilibrium of the certification market. We establish a necessary and sufficient condition under which the certifier can extract the full trade surplus. In general cases, we provide applications showing that the presence of a profit-maximizing certifier does not, in general, guarantee full seller participation or efficient trade.

Date & time: 12 June 2025, 15:30 - 17:00

Venue: Juxian Lecture Hall, B423, Zhixin Building, Central Campus, Shandong University