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Label wars: Competition among NGOs as sustainability standard setters

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  • Poret, Sylvaine

Abstract

This paper examines competition among non-governmental organizations (NGOs) that act as standard-setting organizations when firms selling labeled products have market power in the product market. We consider a double duopoly model in which NGOs compete to offer firms labels for sustainability quality and firms compete to sell vertically differentiated products. We assume that NGO preferences for standard quality levels differ, with some being quality-driven organizations and others being market-driven organizations. We find that these two NGO types must have very different preferences to be present in the label market. Moreover, competition between these two types of NGOs leads to a decrease in standards provided by the quality-driven NGO, an increase in standards provided by the market-driven NGO, and an increase in overall weighted sustainability quality.

Suggested Citation

  • Poret, Sylvaine, 2019. "Label wars: Competition among NGOs as sustainability standard setters," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 1-18.
  • Handle: RePEc:eee:jeborg:v:160:y:2019:i:c:p:1-18
    DOI: 10.1016/j.jebo.2019.02.015
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Labels; NGOs; Vertical product differentiation; Sustainability quality;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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