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Eco-Labeling and the Price Premium

Roger Sedjo () and Stephen Swallow ()

Discussion Papers from Resources For the Future

Abstract: International environmental and government organizations propose eco-labeling as a market incentive to cause industry to operate in an ecologically sustainable and biodiversity-friendly manner. A microeconomic analysis questions whether eco-labeling will cause producer profits in a competitive industry to decline, even under a voluntary system, and whether eco-labeling will necessarily generate different prices for labeled and unlabeled product. Using wood product as an example, results identify conditions that may exist when firms lose profits, even under a voluntary system, and where existing production constraints may lead to a single price, regardless of labeling.

New Economics Papers: this item is included in nep-env
Date: 1999-12-01
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