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Public vs. Private Eco-Labeling of Environmental Credence Goods: Maximizing the Gains from International Integration

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  • Sheldon Ian M

    (Ohio State University)

  • Roe Brian E

    (Ohio State University)

Abstract

Using a model of vertical product differentiation, we analyze the welfare gains from economic integration when countries harmonize their eco-labeling and certification policies for environmental credence goods. Specifically, we show that harmonized mandatory, exclusive discrete labeling will not maximize the gains from economic integration, i.e., the choice of eco-labeling regime can have a negative effect on market structure if firms choose to exit, reducing the range and quality of goods in the integrated market, and thereby reducing aggregate environmental benefits. In contrast, under a harmonized mandatory, non-exclusive discrete labeling regime, private certification increases the likelihood of maximizing the gains from international economic integration.

Suggested Citation

  • Sheldon Ian M & Roe Brian E, 2009. "Public vs. Private Eco-Labeling of Environmental Credence Goods: Maximizing the Gains from International Integration," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-29, December.
    • Handle: RePEc:bpj:bjafio:v:7:y:2009:i:2:n:4
    DOI: 10.2202/1542-0485.1275
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    Cited by:

    1. Tamini, Lota Dabio, 2012. "Optimal quality choice under uncertainty on market development," Working Papers 148589, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    2. Yokessa, Maïmouna & Marette, Stéphan, 2019. "A Review of Eco-labels and their Economic Impact," International Review of Environmental and Resource Economics, now publishers, vol. 13(1-2), pages 119-163, April.
    3. Kari E. R. Heerman & Ian M. Sheldon, 2022. "Sustainable agricultural production, income, and eco‐labeling: What can be learned from a modern Ricardian approach?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(4), pages 1614-1636, December.
    4. Venus, Thomas J. & Drabik, Dusan & Wesseler, Justus, 2018. "The role of a German multi-stakeholder standard for livestock products derived from non-GMO feed," Food Policy, Elsevier, vol. 78(C), pages 58-67.
    5. Tamini, Lota D., 2012. "Optimal quality choice under uncertainty on market development," MPRA Paper 40845, University Library of Munich, Germany.

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