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Public vs. Private Eco-Labeling of Environmental Credence Goods: Maximizing the Gains from International Integration

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  • Sheldon Ian M

    (Ohio State University)

  • Roe Brian E

    (Ohio State University)

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    Abstract

    Using a model of vertical product differentiation, we analyze the welfare gains from economic integration when countries harmonize their eco-labeling and certification policies for environmental credence goods. Specifically, we show that harmonized mandatory, exclusive discrete labeling will not maximize the gains from economic integration, i.e., the choice of eco-labeling regime can have a negative effect on market structure if firms choose to exit, reducing the range and quality of goods in the integrated market, and thereby reducing aggregate environmental benefits. In contrast, under a harmonized mandatory, non-exclusive discrete labeling regime, private certification increases the likelihood of maximizing the gains from international economic integration.

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    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: 1-29

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    Handle: RePEc:bpj:bjafio:v:7:y:2009:i:2:n:4

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    Web page: http://www.degruyter.com

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

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    Cited by:
    1. Tamini, Lota Dabio, 2012. "Optimal quality choice under uncertainty on market development," Working Papers 148589, Structure and Performance of Agriculture and Agri-products Industry (SPAA).

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