The Market for Ethical Goods

Nicolas Bonneton

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: This paper examines the unintended consequences of the rapid growth of markets for ethically labeled goods such as "organic" or "child-labor-free", using a model of voluntary labeling. On the supply and demand side, agents act based on their intrinsic motivation and monetary payoff. After a positive demand shock, the expected social and environmental attributes of both labeled and unlabeled goods deteriorate. As such, even if producing ethically labeled goods help mitigates externalities, it can be optimal for policymakers not to intervene and sometimes to tax these goods. Sorting in this market is non-trivial: under plausible conditions, only the most and least intrinsically motivated agents strategically position themselves in the ethical segment of the market

Keywords: corporate social responsibility; prosocial behavior; ethical labels; subsidy; organic (search for similar items in EconPapers)
JEL-codes: D91 L15 L31 (search for similar items in EconPapers)
Pages: 45
Date: 2023-05
New Economics Papers: this item is included in nep-ind
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.crctr224.de/research/discussion-papers/archive/dp426 (application/pdf)

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:bon:boncrc:crctr224_2023_426

Access Statistics for this paper

More papers in CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany Kaiserstr. 1, 53113 Bonn , Germany.
Bibliographic data for series maintained by CRC Office ().