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Strategic Policy and Environmental Quality: Helping the Domestic Industry to Provide Credible Information

Mari Rege ()

Environmental & Resource Economics, 2000, vol. 15, issue 3, 279-296

Abstract: This paper shows that a country can improve an industry's competitiveness by requiring domestic firms to produce at the environmental standards at which they claim to produce or otherwise impose a penalty on those firms found cheating. Competitiveness will improve because this regulation will help the domestic industry to provide credible information about the environmental quality of its production. The credible information will differentiate domestic products from other products on the world market, and in this way increase consumers' willingness to pay for domestic products. Even if the government has no preferences for environmental quality, it has incentives to regulate its cheaters in order to help the domestic industry to provide credible information and thereby improve competitiveness. Copyright Kluwer Academic Publishers 2000

Keywords: asymmetric information; competitiveness; eco-labelling; environmental quality; environmental standards; strategic environmental policy; strategic trade policy (search for similar items in EconPapers)
Date: 2000
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DOI: 10.1023/A:1008360626542

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