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Eco‐labelling scheme, environmental protection, and protectionism

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  • Huilan Tian

Abstract

. In this paper a model of international duopoly is developed involving competition in both prices and levels of environmental friendliness, and the implications of government policies are studied. It is shown that, contrary to the conventional wisdom, a regulatory increase in the minimum required level of environmental friendliness of imported goods may harm the home firm and may result in a rise in the volume of imported goods. Whether consumers lose or gain from such a regulatory increase depends on consumption spillover effects. We also show that, under certain conditions, the duopoly's equilibrium choice of levels of environmental friendliness is socially optimal.JEL Classification: F00 Eco étiquetage, protection environnementale, et protectionnisme. Ce mémoire développe un modèle de duopole international où la concurrence se fait à la fois par les prix et par les niveaux de sensibilité aux problèmes environnementaux. On étudie les impacts des politiques gouvernementales. Contrairement à ce que suggère la sagesse conventionnelle, il semble qu’un accroissement réglementaire dans le minimum requis de disposition favorable à l’environnement des biens importés peut nuire à l’entreprise locale, et peut résulter en un accroissement du volume de biens importés. Le consommateur perdra ou gagnera en conséquence de cette accroissement de la réglementation selon la nature des effets de retombées. On montre aussi que, sous certaines conditions, le choix des niveaux d’équilibre de sensibilité aux problèmes de l’environnement s’avère socialement optimal.

Suggested Citation

  • Huilan Tian, 2003. "Eco‐labelling scheme, environmental protection, and protectionism," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(3), pages 608-633, August.
  • Handle: RePEc:wly:canjec:v:36:y:2003:i:3:p:608-633
    DOI: 10.1111/1540-5982.t01-2-00005
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    References listed on IDEAS

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    Cited by:

    1. Marette Stéphan, 2018. "Illegitimate or Legitimate Non-Tariff Measures," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 16(2), pages 1-18, November.
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    3. Gilles Grolleau & Lisette Ibanez & Naoufel Mzoughi, 2007. "Industrialists hand in hand with environmentalists: how eco-labeling schemes can help firms to raise rivals’ costs," European Journal of Law and Economics, Springer, vol. 24(3), pages 215-236, December.
    4. Li, Yi, 2020. "Competing eco-labels and product market competition," Resource and Energy Economics, Elsevier, vol. 60(C).

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    JEL classification:

    • F00 - International Economics - - General - - - General

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