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Industrialists hand in hand with environmentalists: how eco-labeling schemes can help firms to raise rivals’ costs

Author

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  • Gilles Grolleau

    ()

  • Lisette Ibanez

    ()

  • Naoufel Mzoughi

    ()

Abstract

Industrialists may promote eco-labeling schemes in order to gain the support of environmentalists and ultimately gain market protection. Beyond the environmental effects of such coalitions, these schemes can provide industrialists a legitimate way to disadvantage rivals, frequently foreign rivals, by raising their costs. We consider a Stackelberg model that determines the conditions under which a domestic firm has incentive to impose an eco-label in order to raise the costs of its foreign rivals. The effects of eco-labeling on domestic social welfare are ambiguous. Policy recommendations are drawn. Notably, factors that may help policy makers to identify situations more vulnerable to undesirable outcomes from a welfare viewpoint are developed.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Gilles Grolleau & Lisette Ibanez & Naoufel Mzoughi, 2007. "Industrialists hand in hand with environmentalists: how eco-labeling schemes can help firms to raise rivals’ costs," European Journal of Law and Economics, Springer, vol. 24(3), pages 215-236, December.
  • Handle: RePEc:kap:ejlwec:v:24:y:2007:i:3:p:215-236
    DOI: 10.1007/s10657-007-9034-6
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    References listed on IDEAS

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    1. Sturm, Daniel & Ulph, Alistair, 2002. "Environment and trade: the implications of imperfect information and political economy," World Trade Review, Cambridge University Press, vol. 1(03), pages 235-256, November.
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    1. repec:kap:regeco:v:52:y:2017:i:3:d:10.1007_s11149-017-9339-5 is not listed on IDEAS
    2. Khan Md Raziuddin Taufique & Chamhuri Siwar & Basri Talib & Farah Hasan Sarah & Norshamliza Chamhuri, 2014. "Synthesis of Constructs for Modeling Consumers’ Understanding and Perception of Eco-Labels," Sustainability, MDPI, Open Access Journal, vol. 6(4), pages 1-25, April.
    3. van't Veld, Klaas & Kotchen, Matthew J., 2011. "Green clubs," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 309-322.

    More about this item

    Keywords

    Eco-labels; Environmental protectionism; Raising rivals’ costs; L15; Q18; Q29;

    JEL classification:

    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q29 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Other

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