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Eco-labeling by a for-profit certifier: countervailing power and its consequences
[Certification écologique par un certificateur à but lucratif : le pouvoir compensateur et ses conséquences]

Author

Listed:
  • Ibrahima Barry

    (UGA [2016-2019] - Université Grenoble Alpes [2016-2019], GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019])

  • Olivier Bonroy

    (INRA - Institut National de la Recherche Agronomique, GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019])

  • Paolo Garella

    (UNIMIB - Università degli Studi di Milano-Bicocca = University of Milano-Bicocca)

Abstract

For-profit certifier's eco-labelling is common in industries where firms have some "countervailing power" on sharing gains from labelling. We show that the certification standard for an environmental quality is lowered when firms have strong "power." A certifier with too low bargaining power will prefer to sell to the best offer rather than bargain. This switch in the selling mechanism also thwarts his incentives in setting the standard. This is consequential for evaluating policies. The dimensions and even signs of welfare changes induced by taxes and subsidies depend upon the mechanism used, and ultimately upon firms' countervailing power.

Suggested Citation

  • Ibrahima Barry & Olivier Bonroy & Paolo Garella, 2017. "Eco-labeling by a for-profit certifier: countervailing power and its consequences [Certification écologique par un certificateur à but lucratif : le pouvoir compensateur et ses conséquences]," Post-Print hal-01523759, HAL.
    • Handle: RePEc:hal:journl:hal-01523759
    DOI: 10.1111/caje.12286
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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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