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Advertising, ecolabeling and consumers’ beliefs: Greenwashing or not?

Author

Listed:
  • Lucie Bottega

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Dorothée Brécard

    (LEAD - Laboratoire d'Économie Appliquée au Développement - UTLN - Université de Toulon)

  • Philippe Delacote

    (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

When information provided by ecolabels is inaccurate and consumers have ambiguous beliefs about the quality of green products, firms can use their advertising strategy in two ways: by informing consumers of the true quality of green goods in order to increase their belief accuracy, or by overstating their true quality to mislead consumers. We show that firms' advertising strategies, which are either informative and/or persuasive, are used to influence consumers' degrees of optimism and confidence. We find conditions under which advertising tools are used together (or not), and provide new conceptual insights about "greenwashing". Furthermore, we analyze how ecolabel stringency impacts "greenwashing"and affects social welfare and average environmental quality.

Suggested Citation

  • Lucie Bottega & Dorothée Brécard & Philippe Delacote, 2024. "Advertising, ecolabeling and consumers’ beliefs: Greenwashing or not?," Post-Print hal-04523019, HAL.
    • Handle: RePEc:hal:journl:hal-04523019
    DOI: 10.1016/j.econlet.2023.111513
    as

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    Keywords

    Ambiguity; Vertical differentiation; Information; Advertising; Greenwashing; Ecolabel;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other

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