Advanced Search
MyIDEAS: Login to save this article or follow this journal

Certification of Socially Responsible Behavior: Eco-Labels and Fair-Trade Coffee

Contents:

Author Info

  • Mason Charles F

    (University of Wyoming)

Abstract

An intriguing alternative to traditional methods for regulating externalities is the provision of information about firms' environmental attributes. An increasingly important example of this approach is "eco-labeling," where a third party certifies firms' products. This sort of approach can also be used in similar circumstances, for example providing consumers with information on the techniques used to produce the good in question (e.g., shade-grown coffee) or the nature of rent-sharing arrangements that govern the transaction (e.g., fair trade coffee). I present a model of this phenomenon. An important aspect of this scheme is that the product in question is typically a credence good (buyers cannot infer product quality from search or consumption), and hence must rely on a third-party for information about the product. But the very fact that consumers cannot infer quality from consumption implies they cannot infer accuracy about the signal; indeed, the certifying agency may not be able to perfectly determine quality at a reasonable cost. As such, the certification process is potentially noisy, albeit with green firms more likely to pass than brown firms. While it is likely to increase the fraction of green units in the market, the introduction of eco-labeling can either increase or decrease welfare. In addition, expected profits earned by green sellers are likely to be more variable in an equilibrium with certification. The paper provides some casual empirical evidence from Latin American coffee markets as a backdrop to the theoretical results.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.degruyter.com/view/j/jafio.2009.7.2/jafio.2009.7.2.1270/jafio.2009.7.2.1270.xml?format=INT
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 7 (2009)
Issue (Month): 2 (December)
Pages: 1-21

as in new window
Handle: RePEc:bpj:bjafio:v:7:y:2009:i:2:n:2

Contact details of provider:
Web page: http://www.degruyter.com

Order Information:
Web: http://www.degruyter.com/view/j/jafio

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bpj:bjafio:v:7:y:2009:i:2:n:2. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.