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Environmental Labelling and Consumer's Choice - An Empirical Analysis of the Effect of the Nordic Swan

  • Thomas Bue Bjorner

    ()

  • Lars Garn Hansen

    ()

  • Clifford S. Russell

    (Department of Economics, Vanderbilt.edu)

Provision of information on the environmental effects of consumption is often put forward as an appealing alternative to traditional means of environmental regulation such as permits and environmental taxes. When consumers in opinion polls are asked if their purchasing decisions would be influenced by information on environmental or ethical aspects of products, the majority seem very ready to say yes. However, evidence for actual behavior along these lines is still limited. The paper presents an empirical analysis of the effect of a certified environmental label (the Nordic Swan), using a large Danish consumer panel with detailed information on actual purchases from the beginning of 1997 to January 2001 (weekly observations). In 1997, few products with the Nordic Swan label were available on the Danish market, as Denmark did not join the program of the other Nordic countries until April, 1997. Since then a considerable number of brands of different products in the Danish market have obtained the label, and the data includes information on purchases before and after a number of brands obtained the Swan label. In the paper we use a multinomial logit model to quantify the effect of the Swan label on consumers' choices among different brands of toilet paper, paper towels and detergents. It does appear that the Nordic Swan label has had a significant effect on Danish consumers' brand choices for toilet paper and detergents, corresponding to a willingness to pay for the certified environmental label of 10-17% of price of the labelled products. Results are less conclusive for paper towels, but the environmental label appears to have had less influence on the brand choice for the user of paper towels. .

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File URL: http://www.accessecon.com/pubs/VUECON/vu02-w03.pdf
File Function: First version, 2002
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Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0203.

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Date of creation: Mar 2002
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Handle: RePEc:van:wpaper:0203
Contact details of provider: Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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  17. 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.
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  23. Andreoni, James, 1988. "Privately provided public goods in a large economy: The limits of altruism," Journal of Public Economics, Elsevier, vol. 35(1), pages 57-73, February.
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