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The Production of Eco-Labels

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  • Christopher Bruce
  • Andrea Laroiya

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. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Christopher Bruce & Andrea Laroiya, 2007. "The Production of Eco-Labels," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(3), pages 275-293, March.
    • Handle: RePEc:kap:enreec:v:36:y:2007:i:3:p:275-293
    DOI: 10.1007/s10640-006-9028-9
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    Cited by:

    1. Lisette Ibanez & Gilles Grolleau, 2008. "Can Ecolabeling Schemes Preserve the Environment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(2), pages 233-249, June.
    2. Monteiro, Jose-Antonio, 2010. "Eco-label Adoption in an Interdependent World," MPRA Paper 20268, University Library of Munich, Germany.
    3. Gerhard Clemenz, 2010. "Eco-Labeling and Horizontal Product Differentiation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(4), pages 481-497, April.
    4. Sun, Junxiu & Yin, Haitao & Wang, Feng, 2014. "Net private benefits of purchasing eco-labeled air conditioners and subsidization policies in China," Energy Policy, Elsevier, vol. 73(C), pages 186-195.
    5. Houe, Raymond & Grabot, Bernard, 2009. "Assessing the compliance of a product with an eco-label: From standards to constraints," International Journal of Production Economics, Elsevier, vol. 121(1), pages 21-38, September.

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    More about this item

    Keywords

    consumer demand; eco-labeling; endangered species; environmental decision-making; production function; P48; Q57;
    All these keywords.

    JEL classification:

    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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