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Voluntary Eco-Labeling and the Price Premium

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  • Roger A. Sedjo
  • Stephen K. Swallow

Abstract

International environmental organizations propose voluntary eco-labeling as a market incentive to promote industry to operate in an ecologically sustainable and environmentally friendly manner. A microeconomic analysis questions whether voluntary eco-labeling will cause producer profits in a competitive industry to decline and whether eco-labeling will necessarily generate different prices for labeled and unlabeled product. Using wood product as an example, results identify conditions that may exist when firms lose profits, even under a voluntary system, and where existing production constraints may lead to a single price, regardless of labeling.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 78 (2002)
Issue (Month): 2 ()
Pages: 272-284

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Handle: RePEc:uwp:landec:v:78:y:2002:i:2:p:272-284

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Web page: http://le.uwpress.org/

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Cited by:
  1. Bennear, Lori S. & Olmstead, Sheila M., 2008. "The impacts of the "right to know": Information disclosure and the violation of drinking water standards," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 117-130, September.
  2. Aditi Sengupta, 2012. "Competitive Investment in Clean Technology and Uninformed Green Consumers," Auburn Economics Working Paper Series, Department of Economics, Auburn University auwp2012-08, Department of Economics, Auburn University.
  3. Sengupta, Aditi, 2012. "Investment in cleaner technology and signaling distortions in a market with green consumers," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 468-480.
  4. Mads Greaker, 2006. "Eco-labels, Trade and Protectionism," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 33(1), pages 1-37, 01.
  5. Monteiro, Jose-Antonio, 2010. "Eco-label Adoption in an Interdependent World," MPRA Paper 20268, University Library of Munich, Germany.
  6. Jensen, Kimberly L. & Jakus, Paul M. & English, Burton C. & Menard, R. Jamey, 2004. "Consumers' Willingness to Pay for Eco-Certified Wood Products," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, Southern Agricultural Economics Association, vol. 36(03), December.
  7. van Kooten, G. Cornelis & Nelson, Harry W. & Vertinsky, Ilan, 2005. "Certification of sustainable forest management practices: a global perspective on why countries certify," Forest Policy and Economics, Elsevier, Elsevier, vol. 7(6), pages 857-867, November.
  8. Hicks, Robert L. & Schnier, Kurt E., 2008. "Eco-labeling and dolphin avoidance: A dynamic model of tuna fishing in the Eastern Tropical Pacific," Journal of Environmental Economics and Management, Elsevier, vol. 56(2), pages 103-116, September.
  9. Sen, Anindita, 2012. "Eco-Labelling and the Labour Market," MPRA Paper 49169, University Library of Munich, Germany.
  10. Swallow, Stephen K., 2013. "Demand-side Value for Ecosystem Services and Implications for Innovative Markets: Experimental Perspectives on the Possibility of Private Markets for Public Goods," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, Northeastern Agricultural and Resource Economics Association, vol. 42(1), April.
  11. Parry, Ian & Fischer, Carolyn & Jawahar, Puja & Aguilar , Francisco, 2005. "Corporate Codes of Conduct: Is Common Environmental Content Feasible?," Discussion Papers, Resources For the Future dp-05-09, Resources For the Future.
  12. Jamalpuria, Aditi, 2012. "On voluntary eco-labeling and fiscal incentives," Economics Letters, Elsevier, Elsevier, vol. 117(1), pages 110-114.
  13. Muradian, Roldan & Pelupessy, Wim, 2005. "Governing the coffee chain: The role of voluntary regulatory Systems," World Development, Elsevier, Elsevier, vol. 33(12), pages 2029-2044, December.
  14. Blanco, Ester & Lozano, Javier & Rey-Maquieira, Javier, 2009. "A dynamic approach to voluntary environmental contributions in tourism," Ecological Economics, Elsevier, Elsevier, vol. 69(1), pages 104-114, November.
  15. Lippert, Christian, 2009. "Fraud and free riding in tropical forests – on the potential for certification to enforce sustainable resource use indirectly," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 58(3).
  16. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers, Southern Methodist University, Department of Economics 1001, Southern Methodist University, Department of Economics.
  17. Yuki Yamamoto & Kenji Takeuchi & Takayoshi Shinkuma, 2012. "Are There Price Premiums for Certified Wood?Empirical Evidence from Log Auction Data in Japan," Discussion Papers, Graduate School of Economics, Kobe University 1209, Graduate School of Economics, Kobe University.
  18. Riera, Pere & Aranda, Leticia & Mavsar, Robert, 2007. "Efficiency and equity of forest policies: A graphic analysis using the partial equilibrium framework," Forest Policy and Economics, Elsevier, Elsevier, vol. 9(7), pages 852-861, April.
  19. Veisten, Knut, 2007. "Willingness to pay for eco-labelled wood furniture: Choice-based conjoint analysis versus open-ended contingent valuation," Journal of Forest Economics, Elsevier, Elsevier, vol. 13(1), pages 29-48, May.

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