The Study On The Formation Of Inflated Certification And Governance Mechanism Under The Collective Reputation

Certification is an important mechanism which solves the problem of information asymmetry between consumers and businesses. However, presently, the Chinese certification market facing serious problem is a certified product were frequently exposed instead of real quality discrepancy, and the certification industry is filled with inflated certification. The paper combines with the special system background of Chinese certification industry, and introduces the new insight of collective reputation, to analyze the formation mechanism of inflated certification under the collective reputation. The paper tries to design the collective punishment mechanism and government regulation mechanism to governance the inflated certification. Specifically, the paper analyzes the three continuous and connected problems.1) The characteristics and contributing factor of collective reputation in the Chinese certification industry. In terms of form, the characteristics of the collective reputation in Chinese certification industry has particularity, on the one hand, system of exogenous, which means the natural of certified products cannot generate collective reputation, but macro exogenous institutional framework embed the characteristics of collective reputation artificially. On the other hand, industry bilateral, which means the feature of collective reputation exists on both sides of consumers and enterprises. Then, we draw lessons from the signal transmission theory in information economics, to analysis the contributing factor of collective reputation in the Chinese certification industry specifically. The study found that industry certification standard is the direct reasons for the formation of collective reputation in Chinese certification industry, the market access system and illegal punishment system strengthen the industry characteristic of collective reputation.2) The formation mechanism of inflated certification in Chinese certification industry under the collective reputation. Industry collective reputation influences the behavior of the certifier in two different ways. On the one hand, with descending of traceability, strategic competition in certification industry will lead to insufficient technology level of the certifier and generate technical inflated certification. We build a dynamic optimization model to solve this problem, under two modes between individual decisions considering other members of the strategy and does not consider other members, we show that the industry equalization technology level is the lowest in three types only exist collective reputation, which will easily lead to inflated certification, on the other hand, as the increase of the degree of information asymmetry between consumers and certifiers, the industry will generate collusion inflated certification, which we build a sequential game model including certifier, consumer and firm to depict collusion behavior of certifier and firm. We found that the characteristics of collective reputation in certification industry strengthen the market of inflated certification.After the analysis of the existence of collective reputation will lead to technical and conspiracy inflated certification, the paper further analyzes how the number of members in collective reputation influences certification strategy. The Study found that the number of members which shared collective reputation reinforcement the effect of inflated certification, the more the number of members in collective reputation, the stronger inflated certification in market.3) The governance mechanism to solve inflated certification under the collective reputation. Under the constraint of collective reputation, governance industry inflated certification could be understood governance of the member collective action dilemma. At first, the paper attempts to rely on the collective punishment mechanism to norm the behavior of certifier. We get through repeated game model with double incomplete information, and design a special information structure among certifiers, which consider the characteristics of scattered point distribution among certifiers as a closed circle. We found that the condition only rely on the collective punishment mechanism of implicit contracts to internal governance inflated certification has very high and the implicit contract mechanism also have members limit conditions. In view of this, we further consider institutional arrangements of signing a contract among certifiers. The study found that only if inflated certification caused by cost savings below a certain threshold value, the dominant contract mechanism can be implemented effectively.However, in the governance of false certification, these two kinds of punishment mechanism both present one-sidedness, which can only sustain honest behavior of certifier, but cannot correct the inflated certification behavior. Therefore, the paper then introduces the government’s regulatory mechanism to govern the inflated certification in order to execute error correction mechanism. Considering the coverage and efficiency of government supervision, we design the fines and floating supervision respectively. In fine mechanism, by building fine constraints evolutionary game model of certifier maintaining collective reputation, we found that, as increasing the strength of the regulators fined gradually, the effectiveness of punishment mechanism also gradually enhanced, when regulators punishment strength is very strong, fine punishment mechanism can governance the problem of inflated certification effectively. In the floating regulation mechanism of governance, we found the floating regulation will offset the "free rider" motivation of certifier and governance the inflated certification to some extentOn the basis of the above research, the paper provides suggestions to govern inflated certification. inflated certification governance includes two aspects, on the one hand, how to reduce the strength of collective reputation in certification industry; on the other hand, how to coordinate access mechanism, punishment mechanism, exit mechanism feedback mechanism under the constraint of collective reputation.