Determinants of Participation versus Consumption in the Nordic Swan Eco-labeled Market

This paper uses data on purchases of Nordic Swan Eco-labeled toilet paper and paper towels by individual Danish households to analyze the determinants of demand for eco-labeled goods and the decision process underlying it. Among several models that are estimated, a double-hurdle model that distinguishes between factors influencing the discrete decision to participate by purchasing an eco-labeled good and the continuous decision about the quantity of the eco-labeled good to be purchased is found to fit the data best. We find that prices as well as consumer tastes and preferences, proxied by their socio-demographic characteristics, have a much stronger impact on the participation decision than on quantity consumed for both Swan-labeled toilet paper and paper towels. The quantity consumed of Swan-labeled goods, on the other hand, is strongly affected by factors such as availability of Swan goods in shops, discount sales on Swan goods, and household size.