Intermediation can replace certification

We consider a market in which consumers do not have perfect information about products qualities. Producers can perfectly reveal that a good is of high quality through certification which entails socially wasteful costs. Firms can choose whether to sell through an intermediary or to sell independently (vertical integration). We show that multi-brand retailing, which leads to a redistribution of profits but not to social costs, can fully or partially replace certification by signaling product quality. Renting the image of a competing high-quality brand is shown to be an outcome which can be sustained through intermediation