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Competing Environmental Labels

Author

Listed:
  • Carolyn Fischer
  • Thomas P. Lyon

Abstract

We study markets in which consumers prefer green products but cannot determine the environmental quality of any given firm's product on their own. A nongovernmental organization (NGO) can establish a voluntary standard and label products that comply with it. Alternatively, industry can create its own standard and label. We compare the stringency of these two types of labels, and study their strategic interaction when they coexist. We find that even with error‐free labels, environmental benefits may be smaller with two labels than with the NGO label alone, and we characterize when label competition is more likely to be environmentally beneficial.

Suggested Citation

  • Carolyn Fischer & Thomas P. Lyon, 2014. "Competing Environmental Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 692-716, September.
    • Handle: RePEc:bla:jemstr:v:23:y:2014:i:3:p:692-716
    DOI: 10.1111/jems.12061
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    References listed on IDEAS

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