Competing eco-labels and product market competition

Yi Li

Resource and Energy Economics, 2020, vol. 60, issue C

Abstract: I examine the impact of competition between eco-labeling programs in a market where eco-labels that communicate information about product's environmental quality (a credence attribute) are also strategic variables for competing firms. Specifically, I consider a dynamic setting where an industry-sponsored eco-labeling program and a program sponsored by environmental NGOs compete strategically in setting the labeling standards, before price-setting firms make strategic choices of which eco-label (if any) to adopt; adopting firms not presently meeting the labeling standards undertake costly quality improvement to comply with them. I find that the competition between eco-labeling programs may lead to the same high environmental benefit as when there exists only the NGO program. I also find that the competition may yield higher social welfare.

Keywords: Eco-labels; Eco-label competition; Environmental quality; Duopoly (search for similar items in EconPapers)
JEL-codes: D43 L13 Q50 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:60:y:2020:i:c:s0928765518303269

DOI: 10.1016/j.reseneeco.2020.101149

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