Eco-Labeling Strategies and Price-Premium: The Wine Industry Puzzle

Business & Society, March 2010

42 Pages Posted: 29 Sep 2012 Last revised: 1 Oct 2012

See all articles by Magali A. Delmas

Magali A. Delmas

University of California, Los Angeles (UCLA)

Laura E. Grant

University of California, Santa Barbara (UCSB)

Date Written: March 10, 2010

Abstract

While there is increasing use of eco-labeling, conditions under which eco-labels can command price premiums are not fully understood. In this paper, we demonstrate that the certification of environmental practices by a third party should be analyzed as a strategy distinct from – although related to – the disclosure of the eco-certification through a label posted on the product. By assessing eco-labeling and eco-certification strategies separately, researchers can identify benefits associated with the certification process, such as improved reputation in the industry or increased product quality, independently from those associated with the actual label. In the context of the wine industry, we show that eco-certification leads to a price premium while the use of the eco-label doesn’t.

Keywords: Information disclosure policy, eco-label, certification, hedonic regression, information asymmetry

Suggested Citation

Delmas, Magali A. and Grant, Laura E., Eco-Labeling Strategies and Price-Premium: The Wine Industry Puzzle (March 10, 2010). Business & Society, March 2010. Available at SSRN: https://ssrn.com/abstract=2154001

Magali A. Delmas (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Laura E. Grant

University of California, Santa Barbara (UCSB) ( email )

Santa Barbara, CA 93106
United States

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