EconPapers    
Economics at your fingertips  
 

Environmental Labeling and Incomplete Consumer Information in Laboratory Markets

Timothy Cason and Lata Gangadharan ()

No 708, Department of Economics - Working Papers Series from The University of Melbourne

Abstract: Survey evidence suggests that consumers care about the environment and are willing to pay a higher price for a product that generates less environmental harm. We induce buyer preferences over quality in a laboratory posted offer market to study sellers' incentives to offer products of differing quality. Buyers are unaware of the product quality before purchase, as is the case for experience goods. We first document the market failure that arises from incomplete information when no signaling or reputations are possible. We then study various treatments that could remedy this failure. Seller reputations and unverified "cheap talk" signals sometimes increase the number of higher-valued 'clean' goods. The only reliable way to improve product quality in the experiment, however, is to use an external body that charges a fee to verify product quality claims.

Keywords: MORAL HAZARD; EXPERIMENTS; ENVIRONMENT (search for similar items in EconPapers)
JEL-codes: D82 Q20 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (10)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Environmental Labeling and Incomplete Consumer Information in Laboratory Markets (2002) Downloads
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:mlb:wpaper:708

Access Statistics for this paper

More papers in Department of Economics - Working Papers Series from The University of Melbourne Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia. Contact information at EDIRC.
Bibliographic data for series maintained by Dandapani Lokanathan ().

 
Page updated 2025-03-30
Handle: RePEc:mlb:wpaper:708