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Information Disclosure Policies: When Do They Bring Environmental Improvements?

  • Toshihiro Uchida

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    There has been a growing interest among policy makers on the use of information disclosure policies for pollution control. This paper theoretically assesses the consequences of information disclosure policies and identifies the conditions under which such policies are likely to bring environmental improvements. Based on a dynamic game framework, the paper shows that both eco-labeling and more general full information disclosure policies may not always result in pollution reduction. Full information disclosure policies are likely to be effective if the product is not heavily polluting and if the minimum quality standard is set quite low. The paper also identifies the conditions under which all consumers are strictly better off with information disclosure policies. Copyright International Atlantic Economic Society 2007

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    File URL: http://hdl.handle.net/10.1007/s11294-006-9062-y
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    Article provided by International Atlantic Economic Society in its journal International Advances in Economic Research.

    Volume (Year): 13 (2007)
    Issue (Month): 1 (February)
    Pages: 47-64

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    Handle: RePEc:kap:iaecre:v:13:y:2007:i:1:p:47-64
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    1. Bjorner, Thomas Bue & Hansen, L.G.Lars Garn & Russell, Clifford S., 2004. "Environmental labeling and consumers' choice--an empirical analysis of the effect of the Nordic Swan," Journal of Environmental Economics and Management, Elsevier, vol. 47(3), pages 411-434, May.
    2. Cason, T.N. & Gangadharan, L., 1999. "Environmental Labeling and Incomplete Consumer Information in Laboratory Markets," Department of Economics - Working Papers Series 708, The University of Melbourne.
    3. Stephen K. Swallow & Roger A. Sedjo, 2000. "Eco-Labeling Consequences in General Equilibrium: A Graphical Assessment," Land Economics, University of Wisconsin Press, vol. 76(1), pages 28-36.
    4. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 113-31, June.
    5. Mattoo, Aaditya & Singh, Harsha V, 1994. "Eco-labelling: Policy Considerations," Kyklos, Wiley Blackwell, vol. 47(1), pages 53-65.
    6. Stefanie Kirchhoff, 2000. "Green Business and Blue Angels," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 15(4), pages 403-420, April.
    7. Bansal, Sangeeta & Gangopadhyay, Shubhashis, 2003. "Tax/subsidy policies in the presence of environmentally aware consumers," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 333-355, March.
    8. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
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