Eco-Labels as a Signal of Quality*

Lester Kwong ()

Journal of Wine Economics, 2011, vol. 6, issue 2, 179-192

Abstract: Using a canonical model of signaling, we show that if the cost of organic viticulture is strictly increasing in the quality dimension, then the use of eco-labels as a signal for quality cannot possibly occur as an equilibrium outcome. Conditions for the existence of such a signalling equilibrium as well as some general properties regarding its configuration are herein characterized. (JEL Classification: L15, L66, M3)

Date: 2011
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