Why some countries adopt ecolabeling schemes in their regulatory arsenal and others do not? (original) (raw)
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The Economics of Eco-Labeling: Theory and Empirical Implications
Over the past several years, environmental economists have been increasingly attracted to the use of information as an alternative to traditional methods for regulating externalities. An example of this approach is ‘‘eco-labeling,’’ where a third party certifies firms’ products; this approach is particularly popular in practice, having been adopted in a variety of countries. With this widespread adoption of eco-labeling, a literature has developed in environmental economics. In this paper, I survey the equilibria that may occur with eco-labeling, and discuss the resultant welfare effects.
2019
The impressive environmental performance of the Blue Angle as a national eco-label scheme of Germany motivated other countries to introduce their own national eco-label schemes. However , there are various factors which determine a country's government to introduce a national eco-label scheme. This paper investigates factors which compel government to introduce a national eco-label scheme. Panel logit regression is conducted using data from 53 countries that are Pakistan's trade partners from 1994 to 2014. The main findings indicate that the probability for a government to introduce a national eco-label scheme is positively related to the economic growth, government integrity, population, R&D expenses, high technology exports, manufacturing tariff, number of type I and type II eco-labels, and per capita CO 2 emissions. Whereas the probability for a government to introduces a national eco-label scheme is negatively related to economic freedom, export performance, and net trade.
On the Economics of Eco-labeling
An intriguing alternative to traditional methods for regulating externalities is the pro-vision of information about firms' environmental attributes. An increasingly important example of this approach is "eco-labeling," where a third party certifies firms' prod-ucts. Such schemes are currently used in a variety of countries. This paper investigates the equilibria that may occur with eco-labeling, and the attendant welfare effects. I model certification as a noisy test, subject to both type I and type II errors, but where green firms more likely to pass than brown firms. While likely to increase the fraction of green units in the market, the introduction of eco-labeling can either increase or decrease welfare.
Eco-labelling, Competition and Environment: Endogenization of Labelling Criteria
Environmental and Resource Economics, 2008
This paper suggests a modelling of the labelling procedure consistent with empirical observations, that allows the endogenous calculation of labelling criteria. The authority in charge of the labelling program chooses the level of labelling criteria so as to maximise the social surplus, anticipating competition between firms in environmental qualities and prices. While accounting simply for the informational role of labels, this model allows to understand observed behavior such as firms' ignorance of a label, resistance, support or indifference of firms to the labelling program and the decision of the authority not to set up a label. Keywords Eco-label • Labelling criteria • Environmental quality • Price competition • Firms' position JEL Classification C72 • L13 • Q20 Grateful thanks are due to Jean-Marc Bonnisseau, Antoine Soubeyran, Joan Canton and an anonymous referee for very helpful comments and suggestions.
European Journal of Law and Economics, 2005
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Creating markets for eco-labelling: are consumers insignificant?
International Journal of Consumer Studies, 2006
The proliferation of voluntary certification and labelling schemes for environmentally and socially responsible production is often seen as driven by companies and consumer demand. Through a careful examination of the initiation and spread of such initiatives in the fishery and forestry sectors, this paper challenges a rational-economic perspective that sees the spread of nonstate governance schemes primarily as a market-driven phenomenon. Drawing on a political consumerism perspective, the paper argues that transnational environmental group networks and their targeting of firms were key to the emergence of nonstate eco-labelling schemes, and that most firms decided to support or participate in such schemes only after intensive environmental group pressure. The paper opposes the view that nonstate governance challenges traditional state authority, by showing that states, through public procurement policies and support, contributed to create markets for forestry and fishery labelling in many countries. Although some states have been more sceptical of fishery labelling, largely because of the way fishery resources are managed, they have come to accept it as a helpful supplement to public rules and regulations.
The International Debate and Economic Consequences of Eco-Labeling
1999
In this paper we analyze the effectiveness of eco-labels in reducing the supply of eco-unfriendly products. We focus on the situation where a labeled product is viewed by consumers as a private good and develop a theoretical model to pin down the interaction between consumers' willingness to pay a higher price for a labeled product and producers' incentive to produce them. Based on the model results, we conclude that labeling is an effective device in solving the problem of asymmetric information on the part of consumers and does provide a market-based solution to the problem of eco-unfriendly methods of production. In particular, we focus on the incentive problems that producers face in the event of imperfect and costly monitoring of labels and conclude that (i) absent increased enforcement, there is a tendency for eco-labeling schemes to increase the number of products with false labels; (ii) there is a Kuznet's U-curve relationship between the supply of eco-friendly p...
Polarisation of Eco-Labelling Strategies
2017
Growing ecological concerns give rise to salient discussions of green policy impact within different social sciences domains. This research studies the outcomes of voluntary environmental labelling in autarky and upon trade integration in the presence of two types of heterogeneity, across countries and across producers. It investigates the impact of the two main types of eco-labels – multiple-criteria-based programmes (ISO Type I) and self-declared environmental claims (ISO Type II), both of which are simultaneously introduced due to the environmental concerns of consumers. The model illustrates the polarisation of eco-labels when the least productive firms tend to avoid green strategies, lower-middle productive and the most efficient firms are incentivized to greenwash, and the upper-middle productive firms choose trustful programmes. It also shows that voluntary green restrictions lead to substantial productivity effects in the market upon opening to international trade, condition...
Market Access Rivalry and Eco-labeling Standards: Are Eco-labels Non-tariff Barriers in Disguise?
2001
Despite the merits of eco-labeling as a consumer information and market-based environmental policy alternative, the promise that green consumerism holds in encouraging environmentally conscious production decisions also raises concerns over whether eco-labeling deters the market access of developing countries in high income countries, and e®ectively serves the role of a non-tari® barrier to trade. In this paper, we disentangle the role of eco-labeling in world trade, and show that (i) imperfectly informed consumption decision making in the absence of labeling has a pro-trade bias; (ii) eco-labeling can guide green consumption and production decisions to reach the e±ciency frontier, provided that (iii) the choice of eco-labeling standards in the two countries are not subject to coordination failure. Taking labeling standards as endogenously determined by market share rivalry between the two countries, we show that strategic use of eco-labeling gives rise to opposing incentives, and r...
Eco-labelling--a case for deregulation?
Law, Probability and Risk, 2005
The general disenchantment with command-and-control mechanisms led to pressure to experiment with tools of deregulation which encourage the desired behaviour through financial incentives rather than through legal coercion. Eco-labelling can be seen as a representation of this trend to deregulate environmental protection by allowing industry to make the decision of whether or not to apply for the label and allowing consumers to decide to shop accordingly. Eco-labelling aims to identify and promote products that have a reduced environmental impact when compared to other similar products. It is a voluntary method of environmental performance certification and labelling that is practised around the world and functions through the co-operation of the three sectors: industry, consumers and eco-labelling authority. This paper will look at Germany's Blue Angel, a national eco-label, and the European Flower, the eco-label for the European Union, to determine whether eco-labelling can be considered a successful mechanism of deregulation.