Abstract
Eco-labeling is a market-based technique for conveying information about consumers’ demands for environmental protection. Most criticisms of eco-labeling have concentrated on demand-side issues – the potential for firms or countries to use eco-labels to manipulate market power – and the difficulty of creating credible labels. In this paper, we argue that fundamental problems also arise on the production side. Specifically, we argue that both increasing returns to scale and complexities in production imply that it will be possible to market only a small percentage of environmental attributes through the use of eco-labels. We present evidence for our hypotheses from a detailed survey of 100 randomly-selected consumer products.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Andreoni J. (1990). Impure Altruism and Donations to Public Goods; A Theory of Warm-Glow Giving. The Economic Journal 100:464–477
Andreoni J. (1995). Warm-Glow Versus Cold-Pickle: The Effects of Positive and Negative Framing on Cooperation in Experiments. The Quarterly Journal of Economics 110(1):1–21
Beaulieu E., Gaisford J. (2002). Labour and Environmental Standards: The ‘Lemons Problem’ in International Trade Policy. The World Economy 25(1):59–78
Carlson L., Grove S., Kangun N. (1993). A Content Analysis of Environmental Advertising Claims: A Matrix Method Approach. Journal of Advertising 22(3):27–39
Church J. (1994). A Market Solution to Green Marketing: Some Lessons from the Economics of Marketing. Minnesota Lain Review 79:245–324
Cremer H., Thisse J. F. (1999). On the Taxation of Polluting Products in a Differentiated Industry. European Economic Review 43:575–594
Dosi C., Moretto M. (2001). Is Ecolabelling a Reliable Environmental Policy Measure?. Environmental and Resource Economics 18:113–127
Erskine C., Collins L. (1997). Eco-labelling: Success or Failure?. The Environmentalist 17:125–133
Fahrig L., Merriam G. (1994). Conservation of Fragmented Populations. Conservation Biology 8(1):50–59
Forsman Eric D. (1998). Northern Spotted Owl. In: M. J. Mac, P. A. Opler, C. E. Haecker, P. D. Doran (eds) Status and Trends of the Nation’s Biological Resources, Vol. 2. U.S. Department of the Interior, U.S. Geological Survey, Reston, Va, pp. 672–675
Gumpper Michael (2000). Do Consumers Respond to Ecolabels: Evidence from a Market Experiment Using Contingent Valuation. Pennsylvania Economic Review 9(1):14–22
Helfand G., Rubin J. (1994) Spreading versus Concentrating Damages: Environmental Policy in the Presence of Nonconvexities. Journal of Environmental Economics and Management 27: 84–91
Imkamp H. (2000) The Interest of Consumers in Ecological Product Information is Growing Evidence from Two German Surveys. Journal of Consumer Policy 23: 193–202
K. Stefanie (2000) Green Business and Blue Angels. Environmental and Resource Economics 15: 403–420
Lamberson R., McKelvey R., Noon B., Voss C. (1992) A Dynamic Analysis of Northern Spotted Owl Variability in a Fragmented Forest Landscape. Conservation Biology 6(4):505–512
Lathrop K., Centner T. (1998) Eco-Labeling and ISO 14000: An Analysis of US Regulatory Systems and Issues Concerning Adoption of Type II Standards. Environmental Management 22(2): 163–172
Liebi T. (2002), ‘Monitoring Eco-Labels; You Can Have Too Much of a Good Thing’, Bern, Switzerland: University of Bern, Diskussionsschraften, dp0207
Loureiro M., McCluskey J., Mittelhammer R. (2002) Will Consumers Pay a Premium for Eco-labeled Apples? Journal of Consumer Affairs 36(2):203–219
Makatouni A. (2002) What Motivates Consumers to Buy Organic Food in the UK? British Food Journal 104(3):345–352
Managi, S. (forthcoming), ‘Are there Increasing Returns to Scale to Pollution Abatement? Empirical Analytics of the Environmental Kuznets Curve in Pesticides’. Ecological Economics (20 pp.)
Matoo A., Singh H. (1994) Eco-Labelling: Policy Considerations. Kyklos 47:53–65
Moon W., Florkowski W., Bruckner B., Schonhof I. (2002) Willingness to Pay for Environmental Practices: Implications for Eco-Labeling. Land Economics 78(1):88–102
Statistics Canada 1992. Family Expenditure in Canada, Cat. No. 62–555, Ottawa.
Statistics Canada 1996. Family Food Expenditures in Canada, Cat. No. 62–554, Ottawa.
Swallow S., Sedjo R. (2000) Eco-Labeling Consequences in General Equilibrium, A Graphical Assessment. Land Economics 76(1): 28–36
Swallow S., Wear D. (1993) Spacial Interactions in Multiple-Use Forestry and Substitution and Wealth Effects for a Singe Stand. Journal of Environmenta Economics and Management 25: 103–120
Teisl M., Roe B., Hicks R. (2002) Can Eco-Labels Tune a Market? Evidence from Dolphin-Safe Labeling. Journal of Environmental Economics and Management 43: 339–359
Thøgersen J. (2000) Psychological Determinants of Paying Attention to Eco-labels in Purchase Decisions: Model Development and Multinational Validation. Journal of Consumer Policy 23: 285–313
Vincent J., Binkely C. (1993) Efficient Multiple-Use Forestry May Require Land Use Specialization. Land Economics 69(4):370–376
Vossenaar R., Zarilli S., Jha V. (eds) (1997) Eco-Labeling and International Trade Basingstoke. Macmillan, UK
Acknowledgment
We would like to thank the Donner Canadian Foundation for its generous financial support. We would also like to thank Eugene Beaulieu, Daniel Gordon, and two anonymous referees for their comments.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Bruce, C., Laroiya, A. The Production of Eco-Labels. Environ Resource Econ 36, 275–293 (2007). https://doi.org/10.1007/s10640-006-9028-9
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10640-006-9028-9