Eco-labeling by a for-profit certifier: countervailing power and its consequences

Certification écologique par un certificateur à but lucratif: le pouvoir compensateur et ses conséquences

Ibrahima Barry (), Olivier Bonroy and Paolo Garella
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Ibrahima Barry: UGA [2016-2019] - Université Grenoble Alpes [2016-2019], GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019]

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Abstract: For-profit certifier's eco-labelling is common in industries where firms have some "countervailing power" on sharing gains from labelling. We show that the certification standard for an environmental quality is lowered when firms have strong "power." A certifier with too low bargaining power will prefer to sell to the best offer rather than bargain. This switch in the selling mechanism also thwarts his incentives in setting the standard. This is consequential for evaluating policies. The dimensions and even signs of welfare changes induced by taxes and subsidies depend upon the mechanism used, and ultimately upon firms' countervailing power.

Date: 2017-11
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Published in Canadian Journal of Economics / Revue Canadienne d'Économique, 2017, 50 (4), pp.1037-1062. ⟨10.1111/caje.12286⟩

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Journal Article: Eco-labelling by a for-profit certifier: Countervailing power and its consequences (2017)
Journal Article: Eco‐labelling by a for‐profit certifier: Countervailing power and its consequences (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01523759

DOI: 10.1111/caje.12286

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