Abstract
The ineffectiveness of a quality certification mechanism can be attributed to consumers’ low willingness to pay for what certifiers consider good quality. Or, it can be attributed to the inability of certification status to provide consumers with information they do not already possess. We present a structural model of demand allowing consumers to infer quality from both certification status and firm reputation. We then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. Our results suggest that consumers do value quality as measured by the accreditation agency, but that on average they do not gain much information beyond what they infer from a firm’s reputation. Still, consumers gain some information about quality that otherwise would not be available. The estimates of structural parameters are then used to quantify the value of this information to consumers.