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Voluntary Eco-Labeling and the Price Premium

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  • Roger A. Sedjo
  • Stephen K. Swallow

Abstract

International environmental organizations propose voluntary eco-labeling as a market incentive to promote industry to operate in an ecologically sustainable and environmentally friendly manner. A microeconomic analysis questions whether voluntary eco-labeling will cause producer profits in a competitive industry to decline and whether eco-labeling will necessarily generate different prices for labeled and unlabeled product. Using wood product as an example, results identify conditions that may exist when firms lose profits, even under a voluntary system, and where existing production constraints may lead to a single price, regardless of labeling.

Suggested Citation

  • Roger A. Sedjo & Stephen K. Swallow, 2002. "Voluntary Eco-Labeling and the Price Premium," Land Economics, University of Wisconsin Press, vol. 78(2), pages 272-284.
    • Handle: RePEc:uwp:landec:v:78:y:2002:i:2:p:272-284
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    References listed on IDEAS

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    1. Wessells, Cathy Roheim & Kline, Jeffrey & Anderson, Joan Gray, 1996. "Seafood Safety Perceptions and Their Effects on Anticipated Consumption under Varying Information Treatments," Agricultural and Resource Economics Review, Cambridge University Press, vol. 25(1), pages 12-21, April.
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    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. Kathryn Harrison, 1998. "Talking with the Donkey: Cooperative Approaches to Environmental Protection," Journal of Industrial Ecology, Yale University, vol. 2(3), pages 51-72, July.
    5. Anderson, Siwan & Francois, Patrick, 1997. "Environmental Cleanliness as a Public Good: Welfare and Policy Implications of Nonconvex Preferences," Journal of Environmental Economics and Management, Elsevier, vol. 34(3), pages 256-274, November.
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    More about this item

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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