Competing Environmental Labels

25 Pages Posted: 26 Jul 2014

See all articles by Carolyn Fischer

Carolyn Fischer

Resources for the Future

Thomas P. Lyon

University of Michigan, Stephen M. Ross School of Business

Date Written: Fall 2014

Abstract

We study markets in which consumers prefer green products but cannot determine the environmental quality of any given firm's product on their own. A nongovernmental organization (NGO) can establish a voluntary standard and label products that comply with it. Alternatively, industry can create its own standard and label. We compare the stringency of these two types of labels, and study their strategic interaction when they coexist. We find that even with errorā€free labels, environmental benefits may be smaller with two labels than with the NGO label alone, and we characterize when label competition is more likely to be environmentally beneficial.

Suggested Citation

Fischer, Carolyn and Lyon, Thomas P., Competing Environmental Labels (Fall 2014). Journal of Economics & Management Strategy, Vol. 23, Issue 3, pp. 692-716, 2014, Available at SSRN: https://ssrn.com/abstract=2472232 or http://dx.doi.org/10.1111/jems.12061

Carolyn Fischer (Contact Author)

Resources for the Future ( email )

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HOME PAGE: http://www.rff.org/~fischer

Thomas P. Lyon

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-615-1639 (Phone)

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