Product Labeling, Consumer Willingness to Pay, and the Supply Chain

  • Robert L. Hicks
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 174)


In this chapter I focus on the nexus between the supply chain and what is known about consumer willingness to pay for social and eco-labels. I briefly discuss the market penetration of product labels and what this means for product supply chains. I then focus on what is currently known about how consumers value label information. I go on to discuss import design issues such as who is certifying the label and the amount and type of information presented on the product label.


Supply Chain Fair Trade Label Product Private Benefit World Resource Institute 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Amacher GS, Koskela E, Ollikainen M (2004) Environmental quality competition and eco-labeling. J Environ Econ Manage 47(2):284–306CrossRefGoogle Scholar
  2. Anderson RC, Hansen EN (2004) Determining consumer preferences for ecolabeled forest products: an experimental approach. J Forestry 102(4):28–32Google Scholar
  3. Anderson RC, Laband DN, Hansen EN, Knowles CD (2005) Price premiums in the mist. For Prod J 55(6):19–22Google Scholar
  4. Basu AK, Chau NH, Grote U (2003) Eco-labeling and stages of development. Rev Dev Econ 7(2):228–247CrossRefGoogle Scholar
  5. Basu AK, Hicks RL (2008) Label performance and the willingness to pay for fair trade coffee: a cross-national perspective. Int J Consum Stud 32(5):470–478CrossRefGoogle Scholar
  6. Basu AK, Hicks RL “Poverty Alleviation through Social Labeling Programs? Information Valuation and Willingness to Pay for Fair Trade Coffee” March 2011 Working Paper, Department of Economics, The College of William and MaryGoogle Scholar
  7. Becchetti L, Rosati FC (2007) Global social preferences and the demand for socially responsible products: empirical evidence from a pilot study on fair trade consumers. The World Econ 30(5):807–836CrossRefGoogle Scholar
  8. Big Room Inc. and the World Resources Institute (2010) Global ecolabel monitor: towards transparencyGoogle Scholar
  9. Big Room Inc. Ecolabel Index Website May (2011) URL
  10. Bjorner TB, Hansen LG, Russell CS (2004) Environmental labeling and consumers’ choice-an empirical analysis of the effect of the nordic swan. J Environ Econ Manage 47(3):411–434CrossRefGoogle Scholar
  11. Bond CA, Thilmany DD, Bond JK (2008) What to choose? the value of label claims to fresh produce consumers. J Agric Resour Econ 33(3)Google Scholar
  12. Bougherara D, Grolleau G, Lockeretz W (2002) Can ecolabeling mitigate market failures? an analysis applied to agro-food products. In Ecolabels and the greening of the food market, Boston, Massachusetts, USA, November 7–9, (2002). pp 111–119. Friedman School of Nutrition Science and Policy, Tufts University, 2002Google Scholar
  13. Carlsson F, Frykblom P, Lagerkvist CJ (2007) Consumer benefits of labels and bans on gm foods-choice experiments with swedish consumers. Am J Agric Econ 89(1):152–161CrossRefGoogle Scholar
  14. Dosi C, Moretto M (2001) Is ecolabelling a reliable environmental policy measure? Environ Resour Econ 18(1):113–127CrossRefGoogle Scholar
  15. Elliott KA, Freeman RB (2003) Can labor standards improve under globalization? Peterson InstituteGoogle Scholar
  16. Following the footprints. The Economist, May, 2011Google Scholar
  17. Hamilton SF, Zilberman D (2006) Green markets, eco-certification, and equilibrium fraud. J Environ Econ Manage 52(3):627–644CrossRefGoogle Scholar
  18. Hicks R (2007) Performance-based labeling. New frontiers in environmental and social labeling, pp 37–58Google Scholar
  19. Hicks RL, Schnier KE (2008) Eco-labeling and dolphin avoidance: a dynamic model of tuna fishing in the eastern tropical pacific. J Environ Econ Manage 56(2):103–116CrossRefGoogle Scholar
  20. Hiscox MJ, Smyth NFB (2006) Is there consumer demand for improved labor standards? evidence from field experiments in social labeling. Department of Government, Harvard UniversityGoogle Scholar
  21. iSeal Alliance (2010) The iseal 100: a Survey of thought leader views on sustainability standardsGoogle Scholar
  22. Kimeldorf H, Meyer R, Robinson I, Prasad M (2004) Consumers of the world unite: a market-based response to sweatshops. Labor Stud J 29(3):57–79CrossRefGoogle Scholar
  23. Kotchen MJ (2006) Green markets and private provision of public goods. J Polit Econ 114(4):816CrossRefGoogle Scholar
  24. Loureiro ML, Jill JM, Ron CM (2002) Will consumers pay a premium for eco-labeled apples? J Consumer Affairs 36(2):203–219Google Scholar
  25. Mahenc P (2008) Signaling the environmental performance of polluting products to green consumers. Int J Ind Organ 26(1):59–68CrossRefGoogle Scholar
  26. Mason CF (2011) “Eco-labeling and market equilibria with noisy certification tests.“ Environ Resour Econ 4(48):537–560Google Scholar
  27. Mattoo A, Singh HV (1994) Eco-labelling: policy considerations. Kyklos 47(1):53–65CrossRefGoogle Scholar
  28. Milkman R (2004) Sales results from ucsb pants experiment. Unpublished paper. Department of Sociology, University of California, Santa BarbaraGoogle Scholar
  29. Mintel Market Research (2010) Are Americans willing to pay more green to get more green? March 2010. URL
  30. Mitchell Josh (2011) Autos get new fuel labels. Wall Str J. Accessed 26 May 2011Google Scholar
  31. Nimon W, Beghin J (1999) Are eco-labels valuable? evidence from the apparel industry. Am J Agric Econ 81(4):801–811CrossRefGoogle Scholar
  32. O’Brien KA, Teisl MF (2004) Eco-information and its effect on consumer values for environmentally certified forest products* 1. J Forest Econ 10(2):75–96CrossRefGoogle Scholar
  33. Ozanne LK, Vlosky RP (1997) Willingness to pay for environmentally certified wood products: a consumer perspective. For Prod J 47(6):39–48Google Scholar
  34. Richardson M, Stahler R (2007) Fair trade. Working Paper 0709, University of Otago, Dunedin, New ZealandGoogle Scholar
  35. Roe B, Levy AS, Derby BM (1999) The impact of health claims on consumer search and product evaluation outcomes: results from fda experimental data. J Public Policy Mark 18(1):89–105Google Scholar
  36. Roe B, Teisl MF (2007) Genetically modified food labeling: the impacts of message and messenger on consumer perceptions of labels and products. Food Policy 32(1):49–66CrossRefGoogle Scholar
  37. Ronchi L (2006) Fairtrade and market failures in agricultural commodity markets. World Bank Policy Research Working Paper 4011, Washington D.C.Google Scholar
  38. Rosenbloom S (2009) At wal-mart, labels to reflect green intent. New York Times. Accessed July 15 2009Google Scholar
  39. Rousu M, Huffman WE, Shogren JF, Tegene A (2007) Effects and value of verifiable information in a controversial market: Evidence from lab auctions of genetically modified food. Econ Inq, 45(3):409–432CrossRefGoogle Scholar
  40. Swallow SK, Sedjo RA (2000) Eco-labeling consequences in general equilibrium: a graphical assessment. Land Econ 76(1):28–36CrossRefGoogle Scholar
  41. Teisl MF, Roe B, Hicks RL (2002) Can eco-labels tune a market? evidence from dolphin-safe labeling* 1. J Environ Econ Manage 43(3):339–359CrossRefGoogle Scholar
  42. Teisl MF, Rubin J, Noblet CL (2008) Non-dirty dancing? interactions between eco-labels and consumers. J Econ Psychol 29(2):140–159CrossRefGoogle Scholar
  43. Terrachoice Marketing. The seven sins of greenwashing. Environmental claims in consumer markets. April 2009Google Scholar
  44. United Nations Environment Programme (2005) The trade and environmental effects of ecolabels: assessment and response. United Nations Environment ProgrammeGoogle Scholar
  45. Wessells CR, Johnston RJ, Donath H (1999) Assessing consumer preferences for ecolabeled seafood: the influence of species, certifier, and household attributes. Am J Agric Econ 81(5):1084–1089CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  1. 1.129 Morton Hall, Department of EconomicsThe College of William and MaryWilliamsburgUSA

Personalised recommendations