Monitoring Eco-Labels: You Can Have Too Much of a Good Thing

Liebi, Thomas (June 2002). Monitoring Eco-Labels: You Can Have Too Much of a Good Thing (Diskussionsschriften 02-07). Bern: Universität Bern Volkswirtschaftliches Institut

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An increasing number of product labels is making environmental claims. Typically, these claims are non-verifiable to consumers, they represent a credence attribute of the product. The usual way to handle this problem is external monitoring of such labels. We consider a model where firms in a competitive market choose product quality and the intensity of monitoring. It is shown that all the firms producing the high quality credence good will choose the same level of monitoring, i.e., an industry standard will evolve. However, in a competitive equilibrium there will be more monitoring than is socially desirable.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics > Economic Theory

UniBE Contributor:

Liebi, Thomas

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Diskussionsschriften

Publisher:

Universität Bern Volkswirtschaftliches Institut

Language:

English

Submitter:

Luca Adolf Brugger

Date Deposited:

23 Apr 2020 10:50

Last Modified:

23 Apr 2020 10:50

JEL Classification:

L15, D82

BORIS DOI:

10.7892/boris.142919

URI:

https://boris.unibe.ch/id/eprint/142919

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