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Eco-Labeling and the Price Premium

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  • Sedjo, Roger A.
  • Swallow, Stephen K.

Abstract

International environmental and government organizations propose eco-labeling as a market incentive to cause industry to operate in an ecologically sustainable and biodiversity-friendly manner. A microeconomic analysis questions whether eco-labeling will cause producer profits in a competitive industry to decline, even under a voluntary system, 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

  • Sedjo, Roger A. & Swallow, Stephen K., 1999. "Eco-Labeling and the Price Premium," Discussion Papers 10826, Resources for the Future.
    • Handle: RePEc:ags:rffdps:10826
    DOI: 10.22004/ag.econ.10826
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    References listed on IDEAS

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