Eco-Labeling and the Price Premium

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.


Issue Date:
1999
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/10826
Total Pages:
17
JEL Codes:
D40; L10; L15
Series Statement:
Discussion Paper 00-04




 Record created 2017-04-01, last modified 2017-08-23

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