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The Economics of Voluntary Versus Mandatory Labels

Author

Listed:
  • Brian E. Roe

    () (Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio 43210)

  • Mario F. Teisl

    () (School of Economics, University of Maine, Orono, Maine 04469)

  • Corin R. Deans

    () (Department of Agricultural, Environmental and Development Economics, Ohio State University, Columbus, Ohio 43210)

Abstract

Labels address a market failure—asymmetric information—through costly expenditures borne by consumers, firms, and taxpayers. In this review, we explore when mandatory and voluntary labeling policies may be socially optimal. Although the analysis ostensibly revolves around simple comparisons of labeling costs and the subsequent benefits from improved information symmetry, more symmetric information may alter social welfare in other ways, e.g., by altering the production of externalities, the exercise of market power, or expenditures on rent-seeking activities. We review work that contributes to a more complete analysis of the relative merits of mandatory and voluntary labeling; that assesses the distribution of welfare effects across affected groups; and that discusses political economy issues, particularly in the context of voluntary labels in international trade. We summarize key patterns of results concerning the relative desirability of mandatory and voluntary labels and discuss likely future directions in this evolving literature.

Suggested Citation

  • Brian E. Roe & Mario F. Teisl & Corin R. Deans, 2014. "The Economics of Voluntary Versus Mandatory Labels," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 407-427, October.
  • Handle: RePEc:anr:reseco:v:6:y:2014:p:407-427
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-100913-012439
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    Citations

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    Cited by:

    1. repec:eee:rensus:v:91:y:2018:i:c:p:180-192 is not listed on IDEAS
    2. Bovay, John & Alston, Julian M., 2016. "GM Labeling Regulation by Plebiscite: Analysis of Voting on Proposition 37 in California," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 2), May.
    3. Balcombe, Kelvin & Bradley, Dylan & Fraser, Iain & Hussein, Mohamud, 2016. "Consumer preferences regarding country of origin for multiple meat products," Food Policy, Elsevier, vol. 64(C), pages 49-62.
    4. Ibrahima BARRY & Olivier BONROY & Paolo G. GARELLA, 2014. "Labelling by a for-Profit Certifier," Departmental Working Papers 2014-07, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano, revised 27 Feb 2016.
    5. Hussein, Mohamud & Fraser, Iain & Costanigro, Marco, 2016. "Hedonic Analysis of Origin of Meat In The United Kingdom," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236353, Agricultural Economics Society.
    6. Sedef Akgungor & Andrea Groppel-Klein & Joerg Koenigstorfer & Yaprak Gulcan & Yesim Kustepeli, 2016. "The Impact of Nutrition Labels on Food Sales: An In-Store Experiment in a Turkish Supermarket," ECONOMIA AGRO-ALIMENTARE, FrancoAngeli Editore, vol. 18(2), pages 207-228.

    More about this item

    Keywords

    ecolabel; quality; differentiation; asymmetric information; policy; trade;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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