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Eco-Labeling and the Price Premium

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  • Sedjo, Roger

    () (Resources for the Future)

  • Swallow, Stephen

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 & Swallow, Stephen, 1999. "Eco-Labeling and the Price Premium," Discussion Papers dp-00-04, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-00-04
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-00-04.pdf
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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, pages 12-21.
    2. Mattoo, Aaditya & Singh, Harsha V, 1994. "Eco-labelling: Policy Considerations," Kyklos, Wiley Blackwell, vol. 47(1), pages 53-65.
    3. Holland, Daniel & Wessells, Cathy R., 1998. "Predicting Consumer Preferences for Fresh Salmon: The Influence of Safety Inspection and Production Method Attributes," Agricultural and Resource Economics Review, Cambridge University Press, pages 1-14.
    4. Kiker, Clyde F. & Putz, Francis E., 1997. "Ecolocical certification of forest products: Economic challenges," Ecological Economics, Elsevier, vol. 20(1), pages 37-51, January.
    5. 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.
    6. 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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    Citations

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    Cited by:

    1. Aditi Sengupta, 2010. "Signaling environmental quality to green consumers and the incentive to invest in cleaner technology: Effect of environmental regulation," Departmental Working Papers 1001, Southern Methodist University, Department of Economics.
    2. Roheim, Cathy A. & Johnston, Robert J., 2005. "A Battle of Taste and Environmental Convictions for Ecolabeled Seafood: A Choice Experiment," 2005 Annual meeting, July 24-27, Providence, RI 19357, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Kitti, Mitri & Heikkilä, Jaakko & Huhtala, Anni, 2009. "‘Fair’ policies for the coffee trade – protecting people or biodiversity?," Environment and Development Economics, Cambridge University Press, pages 739-758.
    4. Hicks, Robert L. & Schnier, Kurt E., 2006. "A Spatial Model of Dolphin Avoidance in the Eastern Tropical Pacific Ocean," 2006 Annual meeting, July 23-26, Long Beach, CA 21290, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Sedjo, Roger, 2004. "Transgenic Trees: Implementation and Outcomes of the Plant Protection Act," Discussion Papers dp-04-10, Resources For the Future.
    6. Jackson, Lee Ann, 2003. "Who Benefits from Quality Labelling? Segregation Costs, International Trade and Producer Outcomes," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57897, Australian Agricultural and Resource Economics Society.
    7. Hoehn, John P. & Deaton, Brady J., Jr., 2003. "Information As A Double-Edged Sword: The Economic And Welfare Consequences Of Certified Labeling For Credence Attributes," Staff Papers 11762, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    8. Jones, Ann & Lansdell, Nicola, 2001. "Environmental Labelling," 2001 Conference (45th), January 23-25, 2001, Adelaide 125682, Australian Agricultural and Resource Economics Society.
    9. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August.
    10. Napitupulu, Togar Alam & Natawidjaja, Ronnie S., 2009. "Adding value to fresh and processed produce through product certification," Working Papers 121040, United Nations Centre for Alleviation of Poverty Through Secondary Crops' Development in Asia and the Pacific (CAPSA).
    11. Monteiro, Jose-Antonio, 2010. "Eco-label Adoption in an Interdependent World," MPRA Paper 20268, University Library of Munich, Germany.
    12. Athearn, Kevin R., 2003. "Can Eco-Labeling Do More Harm Than Good? A Comparative Statics Analysis," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35105, Southern Agricultural Economics Association.
    13. Wanki Moon & Wojciech J. Florkowski & Bernhard Brückner & Ilona Schonhof, 2002. "Willingness to Pay for Environmental Practices: Implications for Eco-Labeling," Land Economics, University of Wisconsin Press, vol. 78(1), pages 88-102.
    14. Fischer, Carolyn & Sedjo, Roger & Jawahar, Puja & Aguilar , Francisco, 2005. "Forest Certification: Toward Common Standards?," Discussion Papers dp-05-10, Resources For the Future.
    15. Moeltner, Klaus & van Kooten, G. Cornelis, 2003. "Voluntary Environmental Action and Export Destinations: The Case of Forest Certification," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(02), August.

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