Eco-label Adoption in an Interdependent World

Jose-Antonio Monteiro

No 10-01, IRENE Working Papers from IRENE Institute of Economic Research

Abstract: The growing popularity of national efforts to promote eco-labeling raises important questions. In particular, developing countries fear that the eco-label can deliberately impose the environmental concern of (high income) importing countries on their production methods. Yet, empirical studies of the adoption of eco-labelling schemes at the cross-country level are scarce due to the lack of data availability. In this paper, the decision to introduce an eco-label is analyzed through a heteroskedastic Bayesian spatial probit, which allows the government’s decision to introduce an eco-label to be influenced by the behaviour of the neighbouring countries. The estimation is performed by extending the joint updating approach proposed by Holmes & Held (2006) to a spatial framework. Empirical evidence highlights the importance of a high stage of development, innovation experience and potential scale effects in the implementation of an eco-label scheme. In addition, results confirm the existence of a strategic interdependence in the eco-label decision.

Keywords: Bayesian Spatial Probit; International Trade; Environmental Policy; Eco-labelling (search for similar items in EconPapers)
JEL-codes: C11 C25 F18 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010-01
New Economics Papers: this item is included in nep-agr and nep-env
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Citations: View citations in EconPapers (2)

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Working Paper: Eco-label Adoption in an Interdependent World (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:irn:wpaper:10-01

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