Abstract
Abstract The code of craft regulation constitutes the legal base for craft and trade occupations in Germany. Resulting from a deregulation in 2004, the requirement to obtain a degree of higher occupational training, which used to be obligatory for founding a business, was dropped for about half of the occupations regulated by this code. While this deregulation has been frequently analyzed from a competition economics’ perspective, evidence regarding the information economics’ aspect of this deregulation is lacking. It is of particular relevance whether the deregulation fostered market failures due to “market-for-lemons” issues or, to the contrary, whether market-endogenous information instruments have emerged – a question located at the pivot of the economic discussion of the craft regulation. This study uses a qualitative research approach and analyzes 268 interviews with firms and customers on craft fairs to examine informational asymmetries on the market for craft services as well as market instruments for their compensation. We find evidence that strong informational asymmetries exist and are compensated by regional reputation building of firms. Further, we show that no formal informational mechanisms have emerged that could determine service quality ex ante. Based upon those results, suggestions for the further study of the informational properties of the craft market are presented.
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