EconPapers    
Economics at your fingertips  
 

Certification and socially responsible production

Alexander Cappelen () and Tone Ognedal

Economics of Governance, 2017, vol. 18, issue 1, 71-84

Abstract: Abstract In many markets, consumers are unable to distinguish between goods that are produced in a socially responsible way and goods that are not. In such situations, socially responsible production is not a profit-maximizing strategy, even if the premium that consumers are willing to pay exceeds the costs. Only firms that are genuinely motivated by social responsibility would then produce in this way, and there would be too little socially responsible production. Improved opportunities for voluntary certification could potentially reduce this problem by allowing firms to signal their type. We examine how the possibility of certification affects the share of socially responsible production. Our main result is that increased certification may reduce the share of socially responsible production by reducing prices in the market for uncertified products and thus crowd out socially responsible producers who do not certify. This provide a mechanism through which certification might have adverse effects on socially responsible production, even when the certification process is perfect and when there is perfect competition among the producers.

Keywords: Social responsibility; Certification; Labeling; Ethical production (search for similar items in EconPapers)
JEL-codes: Q5 M14 D82 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s10101-016-0184-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:ecogov:v:18:y:2017:i:1:d:10.1007_s10101-016-0184-2

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10101/PS2

Access Statistics for this article

Economics of Governance is currently edited by Amihai Glazer and Marko Koethenbuerger

More articles in Economics of Governance from Springer
Bibliographic data for series maintained by Sonal Shukla ().

 
Page updated 2019-08-20
Handle: RePEc:spr:ecogov:v:18:y:2017:i:1:d:10.1007_s10101-016-0184-2