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Eco-Labelling and the Gains from Agricultural and Food Trade: A Ricardian Approach

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  • Heerman, Kari E.R.
  • Sheldon, Ian

Abstract

Following a modern Ricardian approach, trade in environmental products with eco‐labelling is modelled. Based on the model, expressions are derived for the share of products an importer purchases from a specific exporter for low‐cost and environmentally‐friendly technologies. It is then shown that, using bilateral trade and production data, the share equation for low‐cost‐technologies can be estimated, from which parameters describing trade costs and average productivity can then be retrieved. Using the latter parameters, it is also shown how the share equation for environmentally‐friendly technologies can then be used to retrieve a parameter describing eco‐labelling costs. The consumer and environmental gains from eco‐labelling are also analyzed, along with a discussion and comparison of the effects of mutual recognition versus harmonization of countries’ eco‐labelling regimes.

Suggested Citation

  • Heerman, Kari E.R. & Sheldon, Ian, 2016. "Eco-Labelling and the Gains from Agricultural and Food Trade: A Ricardian Approach," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235973, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:235973
    DOI: 10.22004/ag.econ.235973
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    References listed on IDEAS

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    1. Kari E. R. Heerman & Shawn Arita & Munisamy Gopinath, 2015. "Asia-Pacific Integration with China versus the United States: Examining Trade Patterns under Heterogeneous Agricultural Sectors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1324-1344.
    2. Ana Cecília Fieler, 2011. "Nonhomotheticity and Bilateral Trade: Evidence and a Quantitative Explanation," Econometrica, Econometric Society, vol. 79(4), pages 1069-1101, July.
    3. Heerman, Kari E.R. & Arita, Shawn & Gopinath, Munisamy, 2015. "Asia-Pacific Integration with China vs. the United States: Examining trade patterns under heterogeneous agricultural sectors," 2015 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2015, Boston, Massachusetts 189819, Agricultural and Applied Economics Association.
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    Keywords

    Agricultural and Food Policy; Environmental Economics and Policy; International Relations/Trade;
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