Lack Of Reputation Among China's Certification Intermediary Focusing On Low Efficient Equilibrium And Its Improvement

Certification is an assessment activity that tests the products, services, and management systems complying with the relevant technical specifications or standards of conformity. Certification results from the needs of solving the problem of asymmetric information. Certification can reduce market transaction costs, promote market transactions and increase market efficiency. The importance of certification has been a general recognition, and the development level of the certification industry has been an important symbol measure of a national market system. In order to solve the asymmetric information problem, the certificate must be accurate and impartial, otherwise will lose its role, or even exacerbate the information risk. However, certification itself has a serious problem of asymmetric information which may encourage the certification intermediary to take opportunistic behavior.In recent years, China's industry of certification has been developing rapidly. But at the same time, certification industry has raised a serious problem of lack of credibility. False certification is a common phenomenon in china, which seriously harms the interests of consumers and China's export trades, even undermines social credit system.To address this issue, first I build a repeated game model including corporation, consumer and certifier, to analyze the reason for certification intermediary's lack of reputation from the perspective of low efficient equilibrium. Then I bring government relations factor into the KMRW reputation model to analyze whether certification intermediary would pursue a high reputation under the supervision of government. The results show that the current dilemma is caused by poor information transparency of certifier, companies'short-term goal, low fees for false certification and lack of regulation. To solve this problem, the government should optimize the market structure; encourage the establishment of non-profit certification intermediary and strict government regulation.