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Eco-labelling, Competition and Environment: Endogenization of Labelling Criteria

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  • Adel Ben Youssef
  • Rim Lahmandi-Ayed

Abstract

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.
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Suggested Citation

  • Adel Ben Youssef & Rim Lahmandi-Ayed, 2008. "Eco-labelling, Competition and Environment: Endogenization of Labelling Criteria," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 133-154, October.
    • Handle: RePEc:kap:enreec:v:41:y:2008:i:2:p:133-154
    DOI: 10.1007/s10640-007-9184-6
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    8. Bjorner, Thomas Bue & Hansen, L.G.Lars Garn & Russell, Clifford S., 2004. "Environmental labeling and consumers' choice--an empirical analysis of the effect of the Nordic Swan," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 411-434, May.
    9. Ibanez, Lisette & Stenger, Anne, 2000. "Environment and Food Safety in Agriculture: Are Labels Efficient?," Australian Economic Papers, Wiley Blackwell, vol. 39(4), pages 452-464, December.
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    14. Lahmandi-Ayed, Rim, 2000. "Natural Oligopolies: A Vertical Differentiation Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 971-987, November.
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    Citations

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    Cited by:

    1. Brécard, Dorothée, 2014. "Consumer confusion over the profusion of eco-labels: Lessons from a double differentiation model," Resource and Energy Economics, Elsevier, vol. 37(C), pages 64-84.
    2. Andrea Podhorsky, 2020. "Environmental certification programs: How does information provision compare with taxation?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(6), pages 1772-1800, December.
    3. Jason Walter & Yang-Ming Chang, 2017. "Green certification, heterogeneous producers, and green consumers: a welfare analysis of environmental regulations," Journal of Regulatory Economics, Springer, vol. 52(3), pages 333-361, December.
    4. Carolyn Fischer & Thomas P. Lyon, 2014. "Competing Environmental Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 692-716, September.
    5. Mahenc Philippe, 2009. "Wasteful Labeling," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-20, December.
    6. Dorothée Brécard, 2017. "Consumer misperception of eco-labels, green market structure and welfare," Journal of Regulatory Economics, Springer, vol. 51(3), pages 340-364, June.
    7. Hend Ghazzai & R Lahmandi-Ayed, 2018. "Ecolabels: Is More Information Better?," Working Papers hal-01877934, HAL.
    8. Poret, Sylvaine, 2019. "Label wars: Competition among NGOs as sustainability standard setters," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 1-18.
    9. Brécard Dorothée & Lucas Sterenn & Pichot Nathalie & Salladarré Frédéric, 2012. "Consumer Preferences for Eco, Health and Fair Trade Labels. An Application to Seafood Product in France," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 10(1), pages 1-32, April.
    10. Higgins, Kieran & Hutchinson, W. George & Longo, Alberto, 2020. "Willingness-to-Pay for Eco-Labelled Forest Products in Northern Ireland: An Experimental Auction Approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    11. Mireille Chiroleu-Assouline, 2016. "Multiple Standards: the Case of the French Building Industry," Policy Papers 2016.08, FAERE - French Association of Environmental and Resource Economists.
    12. Sylvaine Poret, 2017. "Label Battles: Competition among NGOs as Standard Setters," Working Papers hal-01512229, HAL.
    13. Mark Bagnoli & Susan G. Watts, 2017. "Voluntary Assurance of Voluntary CSR Disclosure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 205-230, February.
    14. Ben Youssef Adel & Abderrazak Chema, 2009. "Multiplicity of Eco-Labels, Competition, and the Environment," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-24, December.
    15. Li, Yi, 2020. "Competing eco-labels and product market competition," Resource and Energy Economics, Elsevier, vol. 60(C).
    16. Ghazzai Hend & Lahmandi-Ayed Rim, 2009. "Vertical Differentiation, Social Networks and Compatibility Decisions," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 9(1), pages 1-23, June.
    17. Li, Yi, 2016. "Competing eco-labels and product market competition," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235389, Agricultural and Applied Economics Association.
    18. Karthik Murali & Michael K. Lim & Nicholas C. Petruzzi, 2019. "The Effects of Ecolabels and Environmental Regulation on Green Product Development," Manufacturing & Service Operations Management, INFORMS, vol. 21(3), pages 519-535, July.
    19. Walter, Jason M. & Chang, Yang-Ming, 2020. "Environmental policies and political feasibility: Eco-labels versus emission taxes," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 194-206.

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    More about this item

    Keywords

    Eco-label; Labelling criteria; Environmental quality; Price competition; Firms’ position; C72; L13; Q20;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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