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Environmental Labelling and Consumer's Choice - An Empirical Analysis of the Effect of the Nordic Swan

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Author Info
Thomas Bue Bjorner ()
Lars Garn Hansen ()
Clifford S. Russell (Department of Economics, Vanderbilt.edu)

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Abstract

Provision of information on the environmental effects of consumption is often put forward as an appealing alternative to traditional means of environmental regulation such as permits and environmental taxes. When consumers in opinion polls are asked if their purchasing decisions would be influenced by information on environmental or ethical aspects of products, the majority seem very ready to say yes. However, evidence for actual behavior along these lines is still limited. The paper presents an empirical analysis of the effect of a certified environmental label (the Nordic Swan), using a large Danish consumer panel with detailed information on actual purchases from the beginning of 1997 to January 2001 (weekly observations). In 1997, few products with the Nordic Swan label were available on the Danish market, as Denmark did not join the program of the other Nordic countries until April, 1997. Since then a considerable number of brands of different products in the Danish market have obtained the label, and the data includes information on purchases before and after a number of brands obtained the Swan label. In the paper we use a multinomial logit model to quantify the effect of the Swan label on consumers' choices among different brands of toilet paper, paper towels and detergents. It does appear that the Nordic Swan label has had a significant effect on Danish consumers' brand choices for toilet paper and detergents, corresponding to a willingness to pay for the certified environmental label of 10-17% of price of the labelled products. Results are less conclusive for paper towels, but the environmental label appears to have had less influence on the brand choice for the user of paper towels. .

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Paper provided by Department of Economics, Vanderbilt University in its series Working Papers with number 0203.

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Date of creation: Mar 2002
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Handle: RePEc:van:wpaper:0203

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Related research
Keywords: Environmental labelling; information provision; consumer brand choice;

Other versions of this item:

Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
D64 - Microeconomics - - Welfare Economics - - - Altruism
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Konar, Shameek & Cohen, Mark A., 1997. "Information As Regulation: The Effect of Community Right to Know Laws on Toxic Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 109-124, January. [Downloadable!] (restricted)
  2. repec:att:wimass:19939 is not listed on IDEAS
  3. Cesare Dosi & Michele Moretto, 2001. "Is Ecolabelling a Reliable Environmental Policy Measure?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 113-127, January. [Downloadable!] (restricted)
  4. Teisl, Mario F. & Roe, Brian & Hicks, Robert L., 2002. "Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 339-359, May. [Downloadable!] (restricted)
  5. Yen, Steven T & Jensen, Helen H & Wang, Qingbin, 1996. "Cholesterol Information and Egg Consumption in the US: A Nonnormal and Hetroscedastic Double-Hurdle Model," European Review of Agricultural Economics, Oxford University Press for the Foundation for the European Review of Agricultural Economics, vol. 23(3), pages 343-56.
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    Other versions:
  8. McConnell, K. E., 1997. "Does Altruism Undermine Existence Value?," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 22-37, January. [Downloadable!] (restricted)
  9. Seema Arora & Timothy N. Cason, 1996. "Why Do Firms Volunteer to Exceed Environmental Regulations? Understanding Participation in EPA's 33/50 Program," Land Economics, University of Wisconsin Press, vol. 72(4), pages 413-432. [Downloadable!] (restricted)
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    Other versions:
  13. Mattoo, Aaditya & Singh, Harsha V, 1994. "Eco-labelling: Policy Considerations," Kyklos, Blackwell Publishing, vol. 47(1), pages 53-65.
  14. Khanna, Madhu & Quimio, Wilma Rose H. & Bojilova, Dora, 1998. "Toxics Release Information: A Policy Tool for Environmental Protection," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 243-266, November. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eerola, Essi & Huhtala, Anni, 2005. "Promoting Demand for Organic Food Under Preference and Income Heterogeneity," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24664, European Association of Agricultural Economists. [Downloadable!]
  2. Toshihiro Uchida, 2007. "Information Disclosure Policies: When Do They Bring Environmental Improvements?," International Advances in Economic Research, Springer, vol. 13(1), pages 47-64, February. [Downloadable!] (restricted)
  3. Hicks, Rob & Schnier, Kurt, 2006. "A Spatial Model of Dolphin Avoidance in the Eastern Tropical Pacific Ocean," 2006 Annual meeting, July 23-26, Long Beach, CA 21290, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
    Other versions:
  4. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August. [Downloadable!] (restricted)
  5. Julian Rode & Robin Hogarth & Marc Le Menestrel, 2004. "Ethical Differentiation and Market Behavior: An Experimental Approach," Economics Working Papers 779, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2006. [Downloadable!]
  6. Katrin Millock & Céline Nauges, 2009. "Household Adoption of Water-Efficient Equipment: The Role of Socio-economic Factors, Environmental Attitudes and Policy," Working Papers 09.16.292, LERNA, University of Toulouse. [Downloadable!]
  7. Jérôme Ballet & Damien Bazin & Abraham Lioui & David Touahri, 2006. "Taxation and The Crowding-Out Effect of Corporate Social Responsibility," Post-Print halshs-00113856_v1, HAL. [Downloadable!]
  8. Soham Baksi & Pinaki Bose, 2007. "Credence Goods, Efficient Labelling Policies, and Regulatory Enforcement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(2), pages 411-430, June. [Downloadable!] (restricted)
  9. Lisette Ibanez & Gilles Grolleau, 2008. "Can Ecolabeling Schemes Preserve the Environment?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(2), pages 233-249, June. [Downloadable!] (restricted)
  10. Junyi Shen, 2008. "Understanding the determinants of consumersf willingness to pay for eco-labeled products: An empirical analysis of the China Environmental Label," OSIPP Discussion Paper 08E001, Osaka School of International Public Policy, Osaka University. [Downloadable!]
  11. Ambec, Stefan & Barla, Philippe, 2005. "Can Environmental Regulations be Good for Business? an Assessment of the Porter Hypothesis," Cahiers de recherche 0505, GREEN. [Downloadable!]
    Other versions:
  12. Sarah Stafford, 2007. "Can consumers enforce environmental regulations? The role of the market in hazardous waste compliance," Journal of Regulatory Economics, Springer, vol. 31(1), pages 83-107, February. [Downloadable!] (restricted)
  13. Parry, Ian & Fischer, Carolyn & Jawahar, Puja & Aguilar , Francisco, 2005. "Corporate Codes of Conduct: Is Common Environmental Content Feasible?," Discussion Papers dp-05-09, Resources For the Future. [Downloadable!]
  14. Huhtala, Anni & Eerola, Essi, 2005. "Voting for environmental policy under income and preference heterogeneity," Discussion Papers 11863, MTT Agrifood Research Finland. [Downloadable!]
    Other versions:
  15. Brouhle, Keith & Khanna, Madhu, 2005. "Determinants of Participation versus Consumption in the Nordic Swan Eco-labeled Market," 2005 Annual meeting, July 24-27, Providence, RI 19443, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  16. Junyi Shen & Tatsuyoshi Saijo, 2007. "Does energy efficiency label alter consumersf purchase decision? A latent class approach on Shanghai data," OSIPP Discussion Paper 07E005, Osaka School of International Public Policy, Osaka University. [Downloadable!]
  17. Brekke, Kjell Arne & Nyborg, Karine, 2005. "Moral hazard and moral motivation: Corporate social responsibility as labor market screening," Memorandum 25/2004, Oslo University, Department of Economics. [Downloadable!]
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