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Label wars: Competition among NGOs as sustainability standard setters

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  • Poret, Sylvaine

Abstract

This paper examines competition among non-governmental organizations (NGOs) that act as standard-setting organizations when firms selling labeled products have market power in the product market. We consider a double duopoly model in which NGOs compete to offer firms labels for sustainability quality and firms compete to sell vertically differentiated products. We assume that NGO preferences for standard quality levels differ, with some being quality-driven organizations and others being market-driven organizations. We find that these two NGO types must have very different preferences to be present in the label market. Moreover, competition between these two types of NGOs leads to a decrease in standards provided by the quality-driven NGO, an increase in standards provided by the market-driven NGO, and an increase in overall weighted sustainability quality.

Suggested Citation

  • Poret, Sylvaine, 2019. "Label wars: Competition among NGOs as sustainability standard setters," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 1-18.
    • Handle: RePEc:eee:jeborg:v:160:y:2019:i:c:p:1-18
    DOI: 10.1016/j.jebo.2019.02.015
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    Cited by:

    1. Herkenhoff, Philipp & Krautheim, Sebastian & Semrau, Finn Ole & Steglich, Frauke, 2024. "Corporate Social Responsibility along the global value chain," Journal of Development Economics, Elsevier, vol. 167(C).
    2. Kopel, Michael & Marini, Marco A., 2022. "Mandatory disclosure of managerial contracts in NGOs," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 65-85.
    3. Dorothée Brécard & Mireille Chiroleu-Assouline, 2020. "The market for "harmful component-free" products under pressure from the NGOs," PSE Working Papers halshs-02878337, HAL.
    4. Herkenhoff, Philipp & Krautheim, Sebastian & Semrau, Finn Ole & Steglich, Frauke, 2024. "Corporate Social Responsibility along the global value chain," Open Access Publications from Kiel Institute for the World Economy 301393, Kiel Institute for the World Economy (IfW Kiel).
    5. Xia Li & Timothy Simcoe, 2021. "Competing or complementary labels? Estimating spillovers in Chinese green building certification," Strategic Management Journal, Wiley Blackwell, vol. 42(13), pages 2451-2476, December.
    6. Keisuke Hattori & Keisaku Higashida, 2023. "Who should be regulated: Genuine producers or third parties?," Journal of Economics, Springer, vol. 138(3), pages 249-286, April.
    7. Dorothée Brécard & Mireille Chiroleu-Assouline, 2024. "Information campaigns and ecolabels by environmental NGOs: Effective strategies to eliminate environmentally harmful components?," PSE-Ecole d'économie de Paris (Postprint) hal-04592469, HAL.
    8. Lassalas, Marie & Duvaleix, Sabine & Latruffe, Laure, 2021. "Stringency of environmental standards, yield, product quality and revenue: Evidence from French wheat production," 2021 Conference, August 17-31, 2021, Virtual 315184, International Association of Agricultural Economists.
    9. Li, Yi, 2020. "Competing eco-labels and product market competition," Resource and Energy Economics, Elsevier, vol. 60(C).
    10. Dorothée Brécard, 2023. "How Corporate–NGO Partnerships Affect Eco-Label Adoption and Diffusion," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(1), pages 233-261, October.
    11. Jespersen, Kristjan & Grabs, Janina & Gallemore, Caleb, 2024. "Ratcheting up private standards by exploiting coopetition: The curious case of RSPO’s adoption of zero-deforestation criteria," Ecological Economics, Elsevier, vol. 223(C).
    12. Takuro Miyamoto, 2023. "Green product diffusion and innovation in supply chains," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 331-353, July.

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    More about this item

    Keywords

    Labels; NGOs; Vertical product differentiation; Sustainability quality;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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