A Review of Eco-labels and their Economic Impact Maïmouna Yokessa, Stephan Marette

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Maïmouna Yokessa, Stephan Marette. A Review of Eco-labels and their Economic Impact. International Review of Environmental and Resource Economics, 2019, 13 (1-2), pp.119-163. ￿10.1561/101.00000107￿. ￿hal-02628579￿

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Distributed under a Creative Commons Attribution - ShareAlike| 4.0 International License International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint neolblcnb enda ipesga htcnb otdb eea opttr to competitors several by posted be can that signal simple a as defined be can eco-label An o rst fe c-redypout.Frsueeolbl ontf osmr bu the about consumers notify to eco-labels use opportunity Firms an products. creates eco-friendly thus, offer goods, to sustainable firms and for eco-friendly perceptions for to Demand linked health. often their are (Tranter damage of environment environmental the of perceptions on Consumers’ consumption their 2009). al., of consumers et impact some the as quality, of environmental awareness high growing with a services have countries, and many goods In for 1999 ). demand al., is et there (Teisl products eco-friendly purchase to consumers induce Introduction 1 eiwo c-aesadterEooi Impact Economic their and Eco-labels of Review A ∗ Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. [email protected] (FRANCE), PARIS 75005 Bernard Claude rue 16 YOKESSA, Maïmouna nteevrnetlqaiy h ocuinsget eerhpirte o tackling for priorities research questions. suggests unanswered conclusion The tools quality. regulatory depending environmental other mechanisms the tax/subsidy with on and eco-labels products polluting combine banning to standards as optimal such quality. socially environmental often improving is for panacea it a Indeed, considered be cannot eco-labels in they that efficiency but show useful, studies their are several hamper perspective, to regulatory a the likely From both are consumers. particular, eco-labels guiding In of proliferation consumers. the to and information complexity credible limitations signaling the for underline We eco-labels examples. of empirical of combine We discussions with eco-labeling. review of literature efficiency a empirical the the questions in review this advances literature, recent theoretical Using and products. offered the of impact environmental the nmn onre,vroseolbl aeeegdfrifrigcnuesabout consumers informing for emerged have eco-labels various countries, many In M cnmePbiu,ArPrseh nvriéParis-Saclay Université AgroParisTech, Publique, Économie UMR M cnmePbiu,IR,Uiest Paris-Saclay Université INRA, Publique, Économie UMR Comment citer cedocument: amuaYOKESSA Maïmouna

tpa MARETTE Stephan Abstract 1 ∗ International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint aemil ecie the described mainly have ( 2017) Chang & Walter and (2016), al. et Prieto-Sandoval (2009), is adjustments markets and incentives for accounting However, 2005 ). Marette, & (Crespi eco-labels. of existence the regarding interests and motivations different have (NGOs) 2011). (Grunert, h rtfil nopse ueoseprclsuiseiiigpeim o aiu eco- various for premiums eliciting studies empirical numerous encompasses field first The atclrycalnigfrtedcso ae.Ifrainaotpout’characteristics products’ about Information maker. decision the for challenging (WTP) particularly pay to willingness high a with consumers attract to producers to incentives provides oiain,mre netvs n iiain feolbl.Atog etcl hs issues, these tackle we Although eco-labels. of limitations and incentives, market Horne motivations, (2014), Gruère (2002), Gallastegui Galarraga by works previous The regulation. the to eco-labels. of functioning the describing improve studies to theoretical used comprises mechanisms field the second The the and willingness. WTP such consumers’ altering both factors examine articles numerous Indeed, fields. characteristics. main friendly two into divided is literature The purpose. those our select illustrating we for proliferate, significant contributions most various As environmental economics. regulatory organization, and industrial economics, as and such the economics contributions, uses experimental theoretical It and as instrument. prices, such policy hedonic contributions, a empirical as from eco-labels advances of main use relevant recent the discuss (3) and eco-labels, of 2003). al., relevance et the (Crespi assess market to the necessary on is intervention analysis public cost/benefit a a of and account, into taken be should instrument policy a as eco-labels of use the cases, other In taxation replace 2001). or al., accompany et can (Golan that norms options and policy are ones mandatory imposing or labels organizations non-governmental and governments, firms, purchase Consumers, and characteristics products. high-quality environmental Eco-labels, internalize them to 1970). help (Akerlof, corresponds consumers, products informing high-quality which a by of entails 1988), absence signals the al., credible to without et leading situation failure, (Ford A throughmarket ). 1973 good determined Karni , a be & (Darby of they characteristics consumption can credence the nor of purchase, experience the before the Environmental checked rumors. and be messages cannot uncontrolled attributes on based or They ignorantly externalities. choices environmental make hard-to-estimate internalize cannot and purchases their of effects that undesirable effects producing favorable instead the behavior, limits consumer on situations has some sectors information in industry environmental eco-labels 25 and of countries proliferation 199 This in 2018. website eco-labels in the 463 to were According there environmental (2018), 2014). fact, Index (Gruère, In Ecolabel 2010 of and eco-labels. 1990 of between diversity products fold and green six number for increased the market labeling in growing increase The an ). 1998 to Roe , leading & is (Teisl goods their of quality higher Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. hsrve dst h ieaueb ouigo oeo h vrokdqetosrelated questions overlooked the of some on focusing by literature the to adds review This limitations the assess (2) eco-labels, of use the for incentives describe (1) to aims study This eco- public creating respect, this In policy. environmental an of part be can Eco-labels impact environmental the about informed imperfectly are consumers situations, many In Comment citer cedocument:

2 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint eas neln h aiu pin o ulcrglto neco-labeling. on regulation public for options various the underline also we eg,bsns-obsns,bsns-ocnue,bsns-ogvrmn,government-to- business-to-government, business-to-consumer, business-to-business, (e.g., rdcsacrigt niomna rtrao elrtospoiigqatttv indi- quantitative providing declarations or criteria environmental to according products questions. unanswered remaining the tackling for priorities .Acmlt eiwo ihqaiycricto a rvddby provided was certification high-quality of review (2010 ). complete Jin A & 2009 ). Dranove , al. et Costa (see eco–labeling” through the of issue the in exception an as appear labels Mandatory labels. setting. organic eco-label for by case defined the be is can as characteristics regulator, some the however, firms; by eco-labels adopted Most voluntarily 2014). public-owned are (Gruère, 2012, globally eco-labels In existing NGOs. of or one-sixth entities represented private only by eco-labels owned mainly are Eco-labels label. the in reductions promote help can information energy the that use. For energy showed 2018). (2016) , star Metcalfe Energy & (see efficiency Hahn energy sector, sector, signal energy to the appliances In electric ). 2018 many Flag , on Blue (see 2018 a in and countries famous water 45 the pure in signaling the beaches label 4,554 Flag in for Blue grown coast and recently clean label Globe has Green eco-labeling the Council services, with sector, Stewardship Regarding tourism Marine labels. labels, rainforest organic highest as and the such for labels, 2014) accounts sector (Gruère, this eco-labels because of food number and agriculture from come examples our of (e.g., scope and mandatory), international). versus national, regional, voluntary (e.g., public, governance private, of mode (e.g., hybrid), ownership non-profit, pollution), of re- source natural biodiversity, (e.g., sustainability, attribute sources, environmental electronics, services), food, tourist and products, agriculture textile (e.g., transportation, targeted services and goods of category channel consumer), communication is as It such criteria 1999a,b)). various (ISO, using definitions eco-labels 14020 characterize ISO to the relevant (see performance distinguish environmental that of signals cators either are that eco-labels to attention our restrict we study, this In eco-labels of Characterization 2 research suggests section the last assesses The 5 instrument. Section policy . 4 a as section eco-labels in of presented use are the eco-labels of of relevance presented limitations are The eco-labels 3. adopting for section incentives in market The eco-labels. of characteristics the 1 Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. h wesi feolbl sas motn eas hsmysa h rdblt of credibility the sway may this because important also is eco-labels of ownership The Many channel. communication business-to-consumer the on focus only we study, this In of some presents section next The follows. as organized is paper this of remainder The n special and 2017) ( Teisl by edited book the consult can readers effects, economic the of view broad a For ora fArclua n odIdsra Organization Industrial Food and Agricultural of Journal nryStar Energy ae saUS niomna rtcinAec ae ieyposted widely label Agency Protection Environmental U.S. a is label Comment citer cedocument:

3 ulse n20 nild“ult promotion “Quality entitled 2009 in published 1 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint Jfr tal. et Jaffry prices, hedonic estimating and data panel consumer using instance, For 1999a). ihmre hrslwrta %o vnlwrta % oee,we consumers when However, 1%. than lower even or 5% than lower shares market with hwdteeitneo significant a of existence the showed ( 2011) al. et Roheim and (2009), al. et Brécard (2004), hsscinpeet h anwrsfcsn ntemre ehnssadaoto of adoption and mechanisms market the on focusing works main the presents section This rc rmu o s iheolbl.Teesuisdsrb h infiatbtlwprice low but significant the describe studies These eco-labels. with fish for premium price such parameters idiosyncratic many on depend they as hazardous is eco-labels with products The ). 2018 IATTC, ; 2002b al., et Teisl (see killed dolphins of number the in reduction pressive io Beghin, & (Nimon prices market on eco-labels of impact the measure directly studies Some factor main the consumers. is low-income eco-labels for with especially products purchases, may of their eco-labels price limiting of The effect insignificant. the sustainability, perhaps in and interest limited little be The have (e.g., they environment If how. the footprint). toward and carbon sensitivity produced their consumers’ on products depends which eco-label an choose of in they efficiency role attributes, changing significant by products’ Indeed, a for chains. play production demand consumers by caused services, damage and environmental goods the decreasing green" and "clean choosing By choices Consumers’ 3.1 eco-labels. describe adopting we for Here, incentives failure. firms’ market and preferences such consumers’ thwarting the toward of response out a driven are being Eco-labels products market. high-quality products’ with on failures, information market imperfect to that leads showed characteristics (1970) Akerlof agents. private by eco-labels eco-labels adopting for incentives Market 3 products. green purchase to motivation consumers’ to turn of now accuracy We the process. and certification organization, the chain supply advertising, generic awareness, consumers’ as impact. environmental the and usage high between which connection for clear paper a recycled perceive influences as they products such products wood for of particularly labeling decisions, environmental (Teisl, purchase the paper consumers’ that recycled showed and ) 2002a products al., wood et Teisl for 2003; Forest adopted European widely Pan also in and are Council consumed labels Stewardship largely Forest Certification also 2004). are , al. Swan et Nordic (Bjørner eco-label countries Nordic the with Likewise, detergents behaviors. and consumer paper altered toilet significantly thus im- tuna an canned to of led labeling and dolphin-safe 1990s the in fishers For by incentive. adopted strong widely a was provide label may dolphin-safe eco-label the an example, problem, environmental an of aware are Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. oteprclrsac neolbl oue ncnues hie n preferences. and choices consumers’ on focuses eco-labels on research empirical Most of shares market the of characterization general the examples, previous the Beyond products, sold of proportion small a represent eco-labels with those products, many For Comment citer cedocument:

4 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint T si h orhclm.Sresadlbeprmnsaeueu o lctn well- eliciting for useful are experiments lab and Surveys column. fourth the in is WTP hwdta oecnuespyapeimfrenvironmen- for premium a pay consumers some that showed (2001) al. et Loureiro and (1999) .Such 2005). Kotchen, (see whole a as society and environment the affect that attributes public products. regular and green between premium outr c-aesi aiu akt.Hwvr ietnln h oiain behind motivations the disentangling However, markets. various in eco-labels voluntary hs eeaignmru rvt trbtsta ietyafc osmruiiyadcertain and utility consumer affect directly that attributes private numerous generating those of income high (2012). the al. indicating effect et Grolleau positional purchaser a the (4) or and 2009), benefits effect green Combris, health a warm-glow & as when (Bougherara such a reason, taste characteristics selfish (2) other a with (3) environment, correlated 1990), positively the Andreoni, is (see for characteristic ego reason or utility altruistic consumer’s pure a a satisfying products (1) eco-labeled whether for unknown chosen is It are challenging. is decisions consumption these of emergence the explains sensitivity and/or consumers’ eco-labels that by confirms signaled Michaud 1 attributes Table and environmental (roses), footprints. for product carbon premium non-food a one found only (2013) is of al. there type et table, eco-label, this of type In differences the country. WTP of and positive irrespective these food, robust words, are other products In regular cases. and green most between in food regular for WTP the than that than higher is products eco-labeled for WTP products. regular the realfor when indicate eco-labels thus for more 1 Table pay an in to studies in intent the interest using biases, consumer’s possible when a Despite overstated confirms characteristic. WTP be environmental positive can strictly WTP a methodology, though hypothetical even a Nonetheless, settings. willingness-to-accept, hypothetical on, and that in WTP found including (2001) preferences, Gallet their & overstate List participants meta-analysis, average, a real-life Using while information recall. uncertainty, imperfect examined, quality and/or under products overload, making decision of quick number and because multiple limited likely imply and choices are environment WTP for artificial biases the upward of However, preferences. thoughtful informed, premiums. a and to WTP lead swaying restrict could factors we WTP the 1, of measure Table study to exhaustive aims In An that meta-analysis studies. estimated. representative intensively few 1, Table been a in to has examples attention eco-labels the our by with shown food As for low. relatively WTP often the of is impact WTP environmental their buy, the they about Although goods care the eco-label. consumers an that without shown product with have “equivalent” product economics an a empirical for for that WTP than their higher that is means eco-label which an 2009), al., et (Tranter products Ravenswaay friendly van tally & Blend by contributions initial The . products by participants to revealed Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. neolbli eetdfrpout hrceie s“muepbi od, namely goods,” public “impure as characterized products for selected is eco-label An higher significantly is food green for WTP the that shows 1 Table of column last The elicit to used methodology the and column second the in is good of type the 1 , Table In messages and logos the on experiments and surveys using WTP elicit studies Other Comment citer cedocument:

5 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint giutr;E W uoenUinAia efr;C-0:Cro otrn 0;CF- 20%; - footprint Carbon CF-20%: Welfare; Animal Union European AW: EU Agriculture; ho hnigadLa eoa;ef c-redy F niomnal redy D Protected : PDO friendly; Environmentally EF: Eco-friendly; e-f: Removal; Leaf and Thinning Shoot aaeetpouto;E:Evrnetlycrie;AB nmlwell-being Animal pest AWB: Integrated certified; IPM: Environmentally production; EC: Biodynamic agricultural production; BD: management that protection; mentioning environmental Eco-label Portugal, to ATCEP: Italy, contribute Conversion-grade; Ireland, techniques CG: Denmark, Kingdom; EU: United 5 indication; the geographic and STLR: Protected Plants; PGI: Fair origin; Flowers of Fair designation FFFP: kilometers; of Number Nkm: 30%; - of footprint Carbon Department 30%: States United Contingent CV: USDA: experiment; mechanism; lab choice in Becker–DeGroot–Marschak Hypothetical preference HCE: BDM: Stated impact; SPLE: valuation; significant experiment; no choice N.S.: Real WTP; RCE: affects experiment; positively label the +: NOTES: okU C C+ + EC + HCE Organic US + HCE + + CG Pork + Italy CV ATCEP + Food + Freedom Carrots BDM PDO (2007) al. Eco-label EU et RCE 5 Lusk + France HCE Norway + Juice (2008) Orange al. CV et Carrots Scarpa (2009) Combris & Bougherara Thinning e-f Salmon Shoot Italy EF China SPLE HCE Oil SPLE Olive (2009) al. et Tranter Seafood + FFFP Sweden (2010) al. et France Olesen US RCE Organic USDA Coffee (2012) al. Shrimp et Aprile France + HCE (2012) al. Wine et Xu (2012) Marette & Disdier (2013) al. et + Sörqvist Roses US + Organic EU (2013) al. et Schmit Tomatoes Organic USDA (2013) HCE al. et Michaud Organic USDA HCE Belgium on (2013a) Impact al. et HCE Caputo Chicken US Eco-labels US Methods Countryies Coffee (2014) al. et Loo Van Yogurt Products (2015) al. et Loo Van (2016) al. et Marchi References Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. al :Eape feprmnso c-aespbihdbten20 n 2016 and 2007 between published eco-labels on experiments of Examples 1: Table Comment citer cedocument: hce UC G+ CG CV EU 5 Chicken

6 W + + + + Antibiotic of Free AWB + IPM + BD + + Organic Organic + Organic + Farming Organic + PGI Label Green + + STLR + Removal Leaf Footprint + Carbon + + + Nkm claim range Free 30% - CF + 20% + - CF AW + EU N.S. Organic Belgium + Footprint Carbon Trade Fair Rainforest Trust Carbon CO 2 msin+ emission h market the International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint ol eapwru netv o rst omnct hog c-aesadipoethe improve and eco-labels through communicate to firms for incentive powerful a be would on htssanblt aes(e.g., labels sustainability that found (2014) al. et Grunert Indeed 2010). al., et Blackman (see rdcssusfim oueeolbl.W o unt h te ieo h aktby market the of side other the to turn now We eco-labels. use to firms spurs products h niomn hsngtv fetmil eed ntesroseso h certification the of seriousness the on depends mainly improving effect in negative effort This of . lack the environment conceal the to claim environmental outrageous “greenwashing” particular, an In making involves controversial. and environ- fragile and sometimes communication is improvement between mental link The products. their high- of attributes for environmental WTP this high goods, quality a low-environmental have for consumers WTP low If a and/or 2008). goods quality improve2015, environmental to Constantatos , goods & firm’s a Bonroy differentiate (see to sales opportunity products. an a its be is of to label attributes appears a environmental eco-labeling such the Hence, of about choice consumers the inform firm, to a decision For strategic firms. by adopted voluntarily are eco-labels Most motivations Firms’ 3.2 products. eco-friendly for WTP higher the exploit to aim regular that than firms products studying clean for WTP higher A differs. products clean these for WTP their and 2010). Pascal , and & no regular Guéguen with between (see contaminations products, products pathogenic organic regular or eating chemical than the in healthier differences is significant scientific products the little organic for is eating there better However, that and food. healthier, evidence producing safer, for is processes dimension regular organic than the environment organic that purchasing and of perception (2009) drivers the important al. are most et foods the Aertsens that instance, underlined For (2009) al. environment. et Mondelaers the with correlated positively is tic major a play not choices. do food welfare) consumers’ animal in role and Trade, Fair footprint, carbon sustainability Alliance, Rainforest with dealing those as such attributes, indicate welfare also animal but and environment, environmental the health, and on social, nutritional focus the the only not between eco-labels is trade several nutrition/environment) to Hence, such like (i.e., dimensions. In not labeling do impact). double environmental consumers such the as that for ineffective showed light authors red the a context, and the nutrition a of for majority light product the green a with (e.g., a lights, qualities having environmental traffic and by nutritional signaled incompatible having items consumers products among how offered foods studied 2017) ( of al. basket et a Lacroix 2016). supermarket, choose Metcalfe, virtual & a (Hahn with products experiment efficient an using From of cost lower possible the by consumption environment energy private cars, these and boilers between as correlation products and the durable of such For nature attributes. the public of and question the raises classification a Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. osmaieteeprclltrtr,mn osmr atterpout ob clean be to products their want consumers many literature, empirical the summarize To characteris- private a that believe consumers when imaginary be may correlation The CO 2 msin r oiieycreae,wihfclttscnues neeti the in interest consumers’ facilitates which correlated, positively are emissions Comment citer cedocument:

7 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint Btea& Bottega ( 2007), Sheldon & Roe (2004), al. et Amacher (2003), Watts & Bagnoli (1995), rhbtv otdtr n r rmcosn h ae.Tehge quality higher The label. the choosing from firm any deters cost prohibitive is It 1970). Akerlof, (see products low-quality produce only they eco-label, this providing Gangopadhyay & Arora by proposed models theoretical The 2001 ). al., et (Golan profits (see organizations certifying independent or companies private by either promoted process au eti niomna hrceitc.Teemdl eyo h rca assumptions crucial the on rely models These characteristics. environmental certain value rs rfis hsipdn h oeaeo h ukcs fcertification. of cost sunk the of coverage zero the to impeding lead thus would profits, competition gross price firms because two products however, their competition, certify differentiate price simultaneously with to cannot duopoly firms Under allows competitors. firm certification from other products, products words, the its their other with certifying competition In price By products. the of low-quality monopoly. intensity selecting under the reduces one duopoly for under that firm the than higher is duopoly relatively under for firms competing namely that of costs, underlines number certification the 1 mid-ranged Figure on depends label. certify the voluntarily of to selection incentive the the with compatible cost certification the is cost When firm. one for affordable is certification the cost of Appendix). the (see product high-quality higher The level differentiation. low-quality product the of at lack starts the X-axis The areas. different quality, in high indicated are with 1 Figure in presented incentives also Firms’ are labeling 1978). high-quality Rosen, and & certification Mussa (see use 3) to stage price in in with (chosen model specification firms differentiation the between vertical of competition a 2 follows stage demand in Further, (chosen Appendix). cost eco-label the sunk the to pay related should quality firms high-environmental two the and/or one that assumed also certification a Without quoted. previously studies levels from is quality differs It The which simplicity, products. duopoly. for high-quality or given or monopoly are low-quality under either choose eco-label Appendix. can an the firms in select that described to assumed model incentives simple firms’ a explain from comes helps figure It This findings. key the of some lowest. the their to to highest according the ordered from are quality goods environmental offered the when occurring differentiation vertical of significant consumers are when (2015) products Constantatos their differentiate & to Bonroy incentives and firms’ studying 2009), ( to al. contributions et Bottega 2009), ( Freitas De section). next the k h ersne nteXai n etfiaincost certification and X-axis the on represented , 2 Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. sosta h outr eeto ftelbldpnso h eaiesizes relative the on depends label the of selection voluntary the that shows 1 Figure presents 1 Figure models, theoretical these behind intuition the of sense a provide To boost and sales increase to aims packaging to adds firm a that information voluntary Any hsls eutcagsudrqatt optto Cro)o ihamria etfiaincost. certification marginal a with or (Cornot) competition quantity under changes result last This C n ihquality high and Comment citer cedocument: k h fetn h osmrsWP hncost When WTP. consumer’s the affecting ,

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9 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint hni scmie ihaohrlblo elkonbad swl sta ealr with retailers that as well as brand, well-known a or label another with combined is it when Bouamra-Mechemache & Bonnet relationships. vertical understanding for promising is which hoeial xmnddownstream examined theoretically (2012) Lemarié & Bonroy and (2015) Constantatos & optdtemriso eua n rai ikfrrtiesadmanufacturers and retailers for milk organic and regular of margins the computed (2016) 1. Figure in shown as firms of number the including profits, their influencing parameters seto euainaodne lhuhpraie sdfcl oqatf.I em htti oi soverlooked is topic this that dynamic seems This It tax. quantify. a to literature. or difficult the norm is by a pervasive, on although based regulation avoidance, stringent regulation more attributes of avoid to environmental aspect as their try well of firms as aware goodwill process, consumers their certification make demonstrate and a to products with their complying of by impact environmental Indeed, the reduce constraining. more be could that regulation next. incentives studied market are that which mean limitations, not and flaws does the firms all by removed used have are eco-labels that fact the However, with manufacturers than label a adopt brands. to national incentive higher a have often brands decreases supermarket label a of value the that brand underscored their they when product, same label the a For adopt to matters. reputation incentive WTP. firms’ high studied and relatively 2006) ( Europe with Monier-Dilhan consumers in & attract supermarkets Hassan to many products as organic promote important States particularly United profits is the of This share those the chain. than evaluating supply for higher the promising are in are sector methods organic These the sector. in conventional margins the per-unit in that showed They France. in margins, retailers’ and farmers’ between structural distinguish This to retailers. researchers and allows and farmers model demand between econometric of relationships the model account econometric into structural takes a that develop supply to and green possible identifying is data it purchase products, real regular Using eco-labels. the with chains labelling. receive supply of will considered burden chain the supply bear will the who in and who benefits both on determining with labels effects chain, that supply ranking the showed and in (2012) differentiation competition Lemarié price & upstream affects Bonroy market chain. downstream the supply links a contractual of the producers of the complexity the among Bonroy underlining competition, exceptions, price the upstream and Among labeling literature. the in overlooked supply a been such generally inside relationships have contractual chain the and eco-label an promoting chain supply incentive the in competition eco-label. of an importance select the to shows 1 Figure simple, very are assumptions 3 Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. hssbeto nelndta rs netvst neti c-aesdpn nseveral on depend eco-labels in invest to incentives firms’ that underlined subsection This a of functioning The issues. important tackle contributions other 1, Figure Beyond o rs outr c-aeigapoc a lob a oatcpt n/rpeetpublic prevent and/or anticipate to way a be also can approach eco-labeling voluntary a firms, For Comment citer cedocument:

10 3 eeteooerc tde aealso have studies econometrics Recent International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint rn neecso h ae enn,tetaeofbtena c-ae n nalternative an and eco-label an between trade-off the meaning, label the of inferences wrong hc en htcnuescneaut niomna trbtsatrprhs,a sthe is as purchase, after attributes environmental evaluate can consumers that means which ,i eoe otls o h r tpitB enwdsrb h iiain htare that limitations the describe now We B. point at firm the for worthless becomes it A, hysoe htmrescaatrsisadaet netvsiflec h ee ffrauds of level the influence incentives agents and characteristics markets that showed They atclryauewe ersrc u teto oeco-labels. to attention our restrict we when acute particularly the label, the about information of broadcast peripheral the criteria, label the of perceptions 2010 ). al., et (Jacquet scientists some by ultimately arbitrary fishing and sustainable lenient defining as label judged Council Stewardship Marine the with case the characterizing inspections NGOs, and of standards eco-labels. motivations setting different for the government analyze and (2016) organizations Lyon industry & (2011), Fischer Kotchen and & (2014), Veld (2004),Van’t Lyon Maxwell & & Fischer Heyes agencies. certifying lax fraud. from of coming incidence the increase classical techniques and firms, polluting of limiting number the for limit policies is barriers environmental fraud entry that when show markets (2006) green Zilberman in prevalent & the less Hamilton regarding market, reporting green illicit the of in possibility quality the With environmental 2001). certification, Moretto, & setting, (Dosi criteria enforcement through and attributes environmental on messages the of credibility labels. energy with attributes, case experience as after defined even partially attributes be the may about sure impacts be Environmental cannot consumers consumption. & that Darby (see means attributes which credence 1973), are Blanco, products Karni, & of (Arguedas impacts product environmental a the purchasing Indeed, before 2013). consumers character- by sustainability visible as directly point, not important are an istics is eco-labeling voluntary in trust Consumers’ eco-labels of Credibility 4.1 with 1, Figure in illustrated cost is certification case same This high-quality place. in first which decrease the eco-labels, the in of certify quality perceived to the incentive in the decrease reduces a to lead reasons three These eco-labels. of time the at motivation of lack the and credibility, and/or choice. awareness of lack the label, consumers’ of absence the choices: consumers’ on eco-labels of highlighted impact (2011) the Grunert limiting barriers information. six credible conveying to barriers several face Eco-labels eco-labels of Limitations 4 Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. c-ae entoscnb otniu,wt xet ubln vrciei,a was as criteria, over quibbling experts with contentious, be can definitions Eco-label the to contribute governments, and agencies private including organizations, Third-party of credibility the damaging limitations potential the present subsections three next The C Comment citer cedocument: A ec,wiea c-ae swrhhl o h r tpoint at firm the for worthwhile is eco-label an while Hence, . k h mligasitfrom shift a implying

11 k hA pitA to A) (point k hB pitB tthe at B) (point International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint utpiiyo c-aesidctsdfeetevrnetldmnin eg,cro foot- carbon (e.g., dimensions environmental different indicates eco-labels of multiplicity A suspect may consumers lenient, too is process certification the if Further, 1994). Sterbenz, & hglgt h opeiyo h aiu criteria various the of complexity the highlights 2 Figure of top the at question puzzling The rdcsta epecnprhs,wt ahhvn ope niomna impact. environmental complex having each with purchase, can people that products consumers, Regarding eco-labels. of use the through attributes environmental of percentage consumption, water pesticides, of use forest, the on impact emissions, gas greenhouse print, eco-labels. of profusion Golan products sustainable purchase will consumer a general that a mean at necessarily sustainability not toward does positive level Being 2000). (Thøgersen, purchases into translate of number vast the by reinforced is complexity This consumption prioritizing environment. in the difficulty of major favor a in to decisions renewable leading of is development transportation the clean protection, and biodiversity energies, pesticides, of use the change, climate eco-labels. to related assessments. environmental in of consists complexity challenge the the betraying eco-labels, without With messages information, information. simple much conveying this too of have & effect consumers Keller marginal if overload, the that information lose found of they (2004) context al. the et Wansink In and 2014). (1989) al., Staelin et (Min cost indicating energy labels is and for transmitted 2013b) case the information is the as when complex, and/or issues technical acute are small a memorization only and market comprehension to possible be will it that imply production in returns complexities increasing and that scale showed to ( 2007) Laroiya & Bruce consumption). energy biodiversity, information environmental of technicality and Complexity 4.2 and complexity the including issues market diverse by influenced be may trust Consumers’ reveal to incentive 2015). the Schilizzi, in & role Auriol crucial 2001; Marette a , & play (Crespi process quality and certification environmental agencies the certifying of among structure Competition cost report1999). the truthfully (Lizzeri, to quality agencies of certification observations private of their incentives industrial the the on from focus contributions field Some organization (2006). Zilberman & Hamilton firms by greenwashing (Mason process certification the through might rejected firms be polluting might imperfect, firms and green noisy whereas is certified, process be certification environmental a the report If truthfully products. or of cost impact reasonable cannot a agencies at certifying quality private determine perfectly and always public However, exami- eco-labels. their adopting reporting firms truthfully of agencies nation certifying third-party the in faith have consumers Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. eko rmtehsoyo rai rdcsta oiieattdsd o always not do attitudes positive that products organic of history the from know We pollution, water pollution, air as such dimensions environmental of number rising The WTP. their or purchase their on impact no have will it label, a trust not do consumers If whether on depends ultimately quality high signaling for eco-labels of credibility The Comment citer cedocument:

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e eco-labels few A 13 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint 2 h arTaelbl(a aear,()teRifrs ae,()teCcaPa ae,(5) label, Plan Cocoa the (4) label, Rainforest the (3) Havelaar), (Max label Trade Fair the brands (2) chocolate national of majority the 2017, in France in instance, For 2015). Rousseau, (see h hclt a akti uoeadi h ntdSae ptmzstecretprolifera- current the epitomizes States United the in and Europe in market bar chocolate The .I h rdc emn,ti ae slctdbtenconventional between located is label this segment, product the In 2018). (Garbay, process) hymygv au oalbloigt t mg tteepneo h nrni ult it quality intrinsic the of expense context, the this at In image its eco-label. to each owing of label specificity a to the value know give not may do they they as Consumers confused provide. be they significantly might information can environmental eco-labels the of of proliferation understanding the consumers’ that affect showed (2014) proliferation Brécard the and labels. different communication in of poor confusion of face because shoppers labels of understanding 89% and that interpreting showed (2011) Oglethorpe & Gadema labels, footprint also is it confusion. however, possible consumers; the to to diversity contributing more two-year providing a thereby (current products, label organic and organic an gain to necessary wine changes French of for created multitude recently the was signal Organic” to to ones. “Conversion signaling efficient called for most label criteria the new distinguish similar a to have Likewise, consumers Palm labels for the these difficult (8) of it and makes Many label, which UTZ sustainability, ). 2016 the Marette , (7) (see label, label Product Free Neutral Carbon Oil the (6) label, Life Biologique), Cocoa (Agriculture the label organic the (1) list: following the in labels two or one exhibited communities rural developing soils and/or protecting emissions, for gas practices greenhouse various reducing with rainforests, sustainability, and cocoa signal to trying labels of tion eco-labels of proliferation The 4.3 imperfect by characterized are knowledge. who limited consumers and inform recall to or face approval smiley social a convey social using that disapproval, the messages carbon underlines injunctive (2017) with a Schubert labels/logos having simplified demand. that of and benefit found prices detergent (2016) on al. impact no et a has Kortelainen use label however, efforts (3) Despite messages, and indications. the quantified products, simplify any other to without these with emissions” indicate carbon comparison (2) “low allow product, as a such to slogan for scale emissions graduated it of a as amount important on the particularly emissions reveal is directly communication (1) of to mode possible the is labels, carbon For (Grolleau 2016). consumers al., to et given is be information must Providing information/knowledge 2014). general , al. instead, insufficient; et (Vlaeminck labels environmental of understanding the aspects. other and production, trade, only local fair eco-labels footprint, signaling carbon others of welfare, and number labels, animal protection organic large environmental to signaling a addition labels with In alternative context are concept. there sustainability a broader in the of lost aspects be certain can covering Consumers 2001). ( al. et Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. h rlfrto feolbl ed oburdsgas ned nasuyo carbon of study a in Indeed, signals. blurred to leads eco-labels of proliferation The improve to aimed have researchers eco-labels, of impact the limit issues those that Given Comment citer cedocument:

14 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint ihatraieeolbl eae olwqaiybnfi rmti ofso,adtomany too firms and Other confusion, this consumers. from of benefit quality minds low the to in related eco-label eco-labels greenest alternative with the of value the of weakening 2010). (Marette, consumers help labels such which .The 2017). ( al. et Messer and (2014), al. et Roe 2012), ( Marette & Disdier 2009), ( Horne (2007), this on labels of number the reducing by obtain could firm a benefit the simulated (2014) h iiain feolbl nelndi h rvosscinriesm usin about questions some raise section previous the in underlined eco-labels of limitations The rdc.Ti ae a hw htteecuieueo h otvle ae aiiae the facilitates label valued most the of use exclusive the that shown has paper This product. ult.Ide,cnuesmyb oeiflecdb h aktn rudalblta the than label a around marketing the by influenced more be may consumers Indeed, quality. b nyfcsn nmnpl.I rsnstecocsfor namely choices choice costs, the the certification to medium-sized presents correspond relatively It not for do monopolist monopoly. choices the on These of market. focusing monopoly only a by in welfare 1 maximizing Figure from starts 3 Figure cost certification the possible. subsidize not It or is label label Appendix). mandatory mandatory the a a in impose if model can the regulator of the 1 regulator that stage The assumed in intervene. is (chosen should welfare regulator maximizing a by when actions explain take to can used be Sheldon can & 1 Roe Figure in by approach studied was eco-labels to linked regulation possible the particular, In intervene to why and When 5.1 surpluses the of damage. sum environmental the including as are agents, defined tools its welfare, regulatory view, of maximize normative to a aiming from policymaker policy a In optimal by an selected products. define various that of studies impact the environmental of the improve many should and could that policy the eco-labels with Regulation 5 overcoming by eco-labels of influence inefficiencies. the these improve of to some try could regulation Hence, labels. surplus. consumers’ and profits WTP, on impact positive has and label, this of recognition Marette product, one on posted for labels experiment different an of In relevance the pursue. classifying to and label WTP best eliciting confusion the about causes uncertain also efficiency become energy which indicated signaling firms, 2003) ( for among Solomon labels voluntary & of Banerjee multiplicity the 2010). that (Marette, eco-labels low-quality select firms to extent the limits which effects, sustainability manifold and/or to environment, leads health, thus the eco-labels about of claims proliferation The environmental represents. of it quality sign environmental a as label this perceive they whether of regardless and guarantees Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. h euao aiiigwlaemyitreet orc eti outr decisions. voluntary certain correct to intervene may welfare maximizing regulator The eco- many of performance weak and fragile the explain limitations these conclude, To a to leads eco-labels of profusion the Indeed, firms. impacts confusion Consumers’ Comment citer cedocument:

15 C 1 < C < C 3 As . International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint ed o aeit con h e itrin htmyrsl rmmnaoylabeling mandatory from result may that distortions new the account into take not incentives do market the we that shows 3 Figure cost. certification the than higher profits gross with 1995). Gangopadhyay , & Arora .W onthv n vrcmlac htcudeeg fafimwants firm a if emerge could that over-compliance any have not do We 2014). al., et Roe (see hscricto ottpclyrltdt adtr aeigcnb on ytemonopolist, the by borne be can labeling mandatory to related typically cost certification This asdot osmr,tefimscocsdfe rmtoeta ol aiiewelfare maximize would that those from differ choices firm’s the consumers, onto passed ult tnadbniglwqaiy adtr ae ol eipsil oimplement to impossible be would label mandatory A low-quality. banning standard quality hnla oteei foefim oee,flysbiiigtecricto otfrbt firms both for cost certification the subsidizing fully However, would firm. label one mandatory of a exit the Such to cost. price lead certification then under the profits of gross coverage zero high- the have a impeding would competition, impose products to high-quality with and firms firms, both both because by selected is label the that ensure to cost for certification First, not areas. is two certification for of cost sunk the as again, Once duopoly. a under welfare maximizing for (see label mandatory the with complying products other from products its differentiate to analysis, simplified this In eco-labels. of emergence the favoring for sufficient always not are would that those from do differ who choices consumers, firm’s onto the When price demand, welfare. market their maximize the in via cost passed this not internalize is not certification of cost sunk the Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. peet h choices the presents 4 Figure duopoly. on focusing only by 1 figure from starts 4 Figure iue3: Figure Comment citer cedocument: C C 1 efr n ihqaiylbludrmonopoly under label high-quality a and Welfare < < C C 4 h hiemxmzn efr st ul usdz the subsidize fully to is welfare maximizing choice the , <

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17 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint Béad&Chiroleu-Assouline , & Brécard ; 2015 Veld, ’t van & Li (see labels of types different of presence ilsadutmtl nrae odprices. food increases ultimately and yields sals hi w outr tnadwt eae ae inln t hyfudthat found They it. signaling label can related that a industry with an and standard NGO voluntary a own between their competition establish study ( 2014) Lyon & Fischer 2018). crop lead decreases may pesticides policy of a withdrawal Such the 4 . because however, Figure shares consequences, in market unexpected mentioned higher to as These subsidies, providing pesticides. of by of share reached prevalence market be the the could limit increasing of to issue labels shares the organic market raised with low (2015) food least, al. very et the Benoit at products. or, unlabeled market several for the or exit one to of firms promotion inefficient the require via eco-labels improvement Goals welfare and 2018). reduction Chiroleu-Assouline, eco- pollution & with as (Brécard environment such eco-label the an for by harmful signaled pressure components well, substitutes replace As friendly to labels. firms their leads of often specifications NGOs sector the by private reach with can eco-label interact companies an NGOs some relevant eco-labels, that be ensure new to creating to Since companies, NGOs. by with used be well to Amacher as (see need interactions specificities have markets’ Firms and ). 2004 costs al., firms’ about et knowledge of lack the of because Foundation, Markets Changing (see sectors textiles and 2018). oil, voluntary palm of fisheries, impacts the environmental in poor certification acute the are criticized monitoring previously public have the and experts credibility guarantee scientific both as that of agencies questions certifying The The inspect eco-labels. and 2015). of al., credibility claims et false (Chen ban eco-labels thus to should attention consumers’ regulator explanation attracting greater on offers impact that limited advertising a Generic has is behaviors. this changing but for sensitivity, panacea and a knowledge not consumers’ developing con- for clean useful of be impact the could on sumption recommendations and explanations generic Providing attribute. sumers. given a for eco-labels of number the limit a may labels for it environmental option or global attributes an of several creation be encompassing the can encourage eco-labels may government by a signaled Indeed, attributes regulator. environmental of playing number pollution, chemical the and on greenhouse consumption, as water such use, attributes land biodiversity, environmental emissions, the gas of proliferation diversity the the As from clear comes a 1995). eco-labels with Hollander, of signal & common (Crampes a consumers up and setting producers for for adopt useful specification voluntarily particularly any to is incentives regulator imposing firms’ A Without influence eco-label. to an attempt eco-labeling. may voluntary it firms, of on efficiency actions mandatory the whether increase decide to might regulator intervene a to eco-labels, of limitations exposed previously the eco-labels Regarding voluntary of efficiency the Improving 5.2 Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. nte pincnit nudrtnigteipc fcmeiincmn rmthe from coming competition of impact the understanding in consists option Another regulator a for issue thorny a be can eco-label an adopt to incentives firms’ Understanding con- persuade to eco-label an to specific definition clear a require characteristics Green Comment citer cedocument:

18 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint (2014). h euao a att oc rst icoeevrnetlifrainbcuei is it because information environmental disclose to firms force to want may regulator The by tackled been has preferences consumers’ of heterogeneity the satisfying of question The rlfrto.Alteemre ecin hleg h euao’ blt oefiinl promote efficiently to ability regulator’s the challenge reactions market these All proliferation. outr c-aesfrrdcn pollution. reducing for eco-labels voluntary Mne al. et Min environment the and wastage, the energy as cost, well consumers’ all as of by consumption terms understandable energy in easily about consequences be consumers to informs color eco-label a an and Such using letter consumers. goods a of by consumption described energy is the class in classifies Each decades label electricity. for This implemented Europe. labeling and consumption States energy United issue, mandatory the environmental the the of by case motivated in the only sold rarely as goods is such policy durable labeling other mandatory for a used Such also EU. is the quantified system with mandatory lights This traffic emissions. combines about eco-label details This car. a purchase consumers when level market the on 4 depends rather and and 3 systematic Figures not 2001). structure. is , al. label et mandatory (Golan a attributes imposing certain that of show aware be to consumers for right a eco-labeling mandatory of relevance The 5.3 next. studied is which eco-labeling, mandatory a of enforcement the to turn may regulator possible a many to oust lead ultimately may would label that single label alternative this an to create to related tempted quality competitors environmental welfare. high maximize to the certification label, particular, environmental single In the a of under stringency the certification regulator determine harmonized the must if favor they Indeed, to 2015). want , al. et organizations Herpen certifying van and 2012; al., et regular Marette between (see label products environmental organic and intermediate 2001). an al., of et development the (Golan studying preferences research consumers’ of heterogeneity the to owing confusion market risks the which in harmonized eco-labels, with different label among single competition a and of criteria promotion environmental the between trade-off a faces regulator the labels, by existing eco-labels of services. number and maximum goods a of requirements normalizing categories the or increasing labels, thereby create, new the to introducing capping allowed by for is market owner the one in that eco-labeling eco-labels limit of NGO to number environmentally choose systematically the also not with could is regulator competition than A label labels beneficial. this that competing show two they and with alone, smaller label be may benefits environmental Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. eoedcdn oefreamnaoylbl h euao hudb aeu bu the about careful be should regulator the label, mandatory a enforce to deciding Before (EU) Union European the at imposed eco-label mandatory a of example an shows 5 Figure the issue, thorny a is labels voluntary of adoption the influencing that argued have we As different to related quality environmental the ascertain precisely cannot consumers When Comment citer cedocument:

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4 21 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint ihtoeo te euaoytools. regulatory other of those with (2017) Chang & Walter and (2012) Marette & Disdier perspective, welfare a From products. internalized. fully not are characteristics environmental and information perfect provide prices to relation in demand product of elasticity low The 2008). al. , et (Marette sold unit per etletraiiso h rdcinpoes hs vlain r fe odce using conducted often are evaluations These environ- process. negative production and the positive of the externalities assessing mental factors, other environmental among relevant implies, the which product. all dimensions, monetizing given eliciting entail a would by of analysis and economic characteristics sections empirical environmental Ideally, previous various in the presented for limitations preferences the consumers’ all account into taking by basis. case-by-case a Applied on society. policies for evaluating burden for a useful is thus tools are pre- of estimations shortcomings redundancy the unnecessary of the some although overcome above, may sented tools of combination a on Such taxes/subsidies products. and consid- green products be non-green thus banning/limiting should standards Eco-labels complement to insufficient. Indeed, ered are optimal. alone socially eco-labels is that argued instruments (2009) other Horne and eco-labels of combination the that argued ban- standards green as on subsidies such and/or instruments products, non-green policy on other taxes products, with non-green ning/limiting associated be thus can Eco-labels isolation. in applied instrument each and or regulation standards no quality either minimum under both than of labeling combination showed mandatory the theoretically under (2018) higher Voßwinkel is & welfare Birg social socially that is 2003). what Gangopadhyay, with compared & differentiation (Bansal quality of optimal market excess because an useful, to Although is lead Regulation all may as imperfection consumers. tools. useful some these be by still internalized of would be use tools cannot other externalities optimal consumers, the to information on provide conclusions could eco-labels definitive any provide not do account. into taken be consumed. should quantities the that on distortions tax/subsidies entails by tool induced Every variations price the of tax/subsidy impact the the limits by affected are prices alternative as choices regulatory consumers’ a on is impact subsidy price and/or the taxation on safety based of and mechanism health both The when society. objective for legitimate matter a however is by which products, quality, of However, low diversity the eliminating trade. a reducing facilitates of producers drawbacks that the on process have production may impose standards specific standards minimum-quality a and or Norms quality of level taxation. minimum and norms as such instruments compared be should eco-labels of shortcomings and by advantages signaled the characteristics Therefore, the eco-labels. internalizing from knowledge consumers and many recognition impede of eco-labels, lack about the including limitations, sections, previous in underlined Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. h vlaino oiyo aeb-aebsssol opr l euaoytools regulatory all compare should basis case-by-case a on policy a of evaluation The not do eco-labels recall, limited with consumers by recognition of lack their of Because analyses economic (2012), Marette & Disdier and (2008) Parry & Goulder by shown As control and command chooses often regulator the policy, environmental Regarding Comment citer cedocument:

22 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint hnteetmtdWPfrteipoeeto n hrceitcpu h siae WTP estimated the plus characteristic one of improvement the for WTP estimated the when eudrie h iiain feolbl o ovyn ope nomto oconsumers. to information complex conveying for eco-labels of limitations the underlined we h eeac feolbl o odcigevrnetlplc a ifraogcoun- among differ can policy environmental conducting for eco-labels of relevance particular, The In eco-labels. on studies prior of findings main the presented sections previous The ato ra akto od/hrceitc,wihutmtl assteqeto fthe of question the raises ultimately which goods/characteristics, of basket broad a of part aiu iesoso niomna utiaiiyit igemntr au.TeWTP The value. monetary single a into sustainability environmental of dimensions various re,dpnig o xml,o h teto adt nomto ntessanbeand sustainable the on consumers. information local to by paid dimensions environmental attention the on example, for depending, tries, perspectives research future and Conclusion 6 standard, a eco-label, mechanism. an these tax/subsidy of a address combination and/or should optimal analysis the cost/benefit determine to The limitations asked together. methodological are characteristics participants two when WTP" the "common value the to than greater is characteristic another for occurs that effect sub-additivity the underlined ( 1992) Knetsch & as Kahneman or WTP. own of its stability on evaluated is it whether on depending vary may good/characteristic a for the aggregates analysis Cost/benefit issues. environmental accounting among without conflicts outcome, potential specific the a for on focusing methods preference revealed or stated 2. 1. Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. eietfidsvrloeloe susta emipratt td ntefuture. the in study to important seem that issues overlooked several identified We lc hm e icut htdpn ntesac o c-aescudb fee for offered be could eco-labels for search the on depend that discounts New them. place substitutions complex the of because define to tricky is basket a for eco-label An product. eco-labels neglect and products some for eco-labels favor may person each products, neetdcnues oee,tenme fcnuessacigfrenvironmental for searching consumers of number the However, consumers. interested re- even or products, on posted eco-labels These the complement products. large may various messages of a exhaustive performance provide environmental the may on smartphones information of with amount basket. barcodes whole scanning the for consumers, eco-labels of Regarding types thus these should understand research to More conducted consumers. be by made given products a non-green of and eco-label green between the than rather basket this of eco-label products the purchased of all question of the basket consequences the raises the Considering about products. worried polluting less other them buying make of a to buying tending and consumers products of green self-confidence a few words, the other increasing In exist, expensive. may effort” relatively effect “green are self-licensing that the goods of green slackening of the consumption and/or the after constraints budget of because of others basket whole for the consider you If consumer. each by basket purchased whole services the and product. of goods specific aspect of environmental a the of explain levels not quality one do different approaches on these the However, focus and tomatoes) only (e.g., experiments product or of type models theoretical many consumers, Regarding Comment citer cedocument:

23 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint 7. 6. 5. 4. 3. Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. ihrpae xhne nmres h osblt feiigetrn akt and market, a configurations exiting/entering dynamic of possibility integrating the by markets, analysis in the exchanges extend repeated to with possible is It . welfare h c-ae a eefiin rukondpnigo ayprmtr,including parameters, many on depending unknown or efficient be may eco-label The rdc ai oudrtn h pia efr hie.Ti spriual h case the particularly is This choices. welfare optimal the understand to basis product la niomn nhat ol nraetedmn o rdcswt eco-labels. with products for a demand of the benefits increase indirect could these health of on aware environment Being clean locally. indirect health an human have and thus, animal and on quality effect environmental benefits. improve health eco-labels or cases, safety, quality, many signaling In labels other with coupled how be could observe Eco-labels to relevant an is innovation. and green it products to services, contribute and sustainable eco-labels goods more greener for provide to demand firms is for there incentive As the technologies. on development and cleaner eco-labeling research of of the in effect investment the and innovation assess technological to for conducted incentives be also topic. might this research on Further out carried data be and should situations, work economic More availability. of of heterogeneity because effects, environment environmental the of on complexity eco-labels the of illustrates influence work the This quantifying deforestation. of affect difficulty not the does reject certification to that unable hypothesis were null they the however, indicators, their many Despite considered Mexico. that in work deforestation impressive the on estimated eco-labels precisely Council Stewardship (2018) Forest al. the of on et effect eco-labels Blackman of exceptions, impact the the Among quantify studies environment. few view, of point regulatory a From the detailing product-by-product models a with mechanisms. WTP on market of analysis estimations An empirical combine regulation. therefore of would diminished cost basis be the would label account mandatory into a taking finance imposing to by of way benefits the social and The non-compliance, policy. for a such penalty inspections the of firms, number foreign the and determine the domestic must on for policymaker Depending the imposed. firms, be inspecting of should cost eco-label mandatory a whether deciding for product-by- a on a made on often realized more be be thus should analyses should Cost/benefit welfare basis. and alterna- case-by-case environment and the eco-labels both of on impact instruments The tive messages. clear hampers that proliferation the objective. the is maximization instru- welfare regulatory when no choices that consumers’ showed dominates section clearly previous ment the view, of reputation. point good regulatory a a lose From to label a for possibility the maximizes that standard quality minimum a would justifying that one regulation as future such for gen- stringent, window is more a eco-label be open an may of eco-label presence An the of overlooked. aspect erally dynamic regulation The and investment, period. exchanges, one of considering aspect by static regula- the and examine organization only industrial economics in tory studies many regulator, the and firms Regarding unclear. is products green/non-green on information Comment citer cedocument:

24 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint etaktetorveesfrtercmet n h dtrfrhsspot hspaper This support. his for editor the and comments their for reviewers two the thank We a uddb h rjc ITLSAR1-E100 nne yteFec National French the by financed ANR-17-CE21-0003 DIETPLUS project the by funded was gnyfrRsac (ANR). Research for Agency oiy hc r eeal endb clgcl oiooia,ado epidemiological and/or toxicological, ecological, by defined generally are which policy, Acknowledgments that decision-making. analyses public cost/benefit and to debates lead help effects should different approaches the economic account paper, into this taking in By underscored environment. the improving at aimed objectives environmental of studies classical for complement accounting to approach appropriate economic is An incentives and information. behaviors providing for imperfect but useful is 9. 8. Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. eodteeoeloe usin,teeooi ieaueudrie hta eco-label an that underlines literature economic the questions, overlooked these Beyond seolbl r fe acn ndvlpn onre,teei iteeprclevidence empirical little is there countries, developing in nascent often are eco-labels As hsrie h ope usino rcs niaossgaigalcaatrsisversus characteristics all signaling indicators precise of question complex the raises This h mrec fteotmllvlo niomna ulcgoods. public environmental of level to optimal contribute the and of citizens, emergence interested the attract for amenities, labels public green green approach, signal could (1956) could Tiebout goods cities a public such of with level Indeed, optimal the 1956). (Tiebout on that , emerge such pressure goods, competitive public places local cities of across provision kind the competition a which developing in of to model consist ready Tiebout could not extension of and/or interesting questions An these cities. to green sensitive toward not move activities are public inhabitants its if certify/label limited to be government for can local Beyond a issue 2019). for complex Accreditation, incentive Carbon a the Airport example, is (see this which pollution of airports, levels of high with management airports carbon the providing local institution or of an services certification is public Accreditation by a Carbon eco-labels Airport of the use instance, nascent For the authorities. of studies of likely lack the provided. a on be noted should We evidence countries More developing in nations. eco-labels these of in expansion attributes environmental for 1. WTP Table in on shown as countries, developed from is evidence dimensions. empirical these all of for amount large accounting grading A synthetic a displaying label simplified a Comment citer cedocument:

25 International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint asl .&Rmsai .(00.Lbl o mfos htcnte do? they can What foods: gm for Labels (2010). B. Ramaswami, & S. Bansal, environmentally of presence the in policies Tax/subsidy (2003). S. Gangopadhyay, & S. Bansal, impacts signaling and informational The (2013). B. Ramaswami, & S., Chakravarty, S., Bansal, a sustainability: and efficiency energy for Eco-labeling (2003). D. B. Solomon, & A. Banerjee, and Competition consumers: responsible socially to Selling (2003). G. S. Watts, & M. developing Bagnoli, in certification through signaling Quality (2015). G. S. Schilizzi, & E. Auriol, overcompli- voluntary of model theoretical a Toward (1995). S. Gangopadhyay, & S. Arora, trust consumers responsibility, environmental Corporate (2013). E. Blanco, & C. Arguedas, The labels: quality food of valuation Consumers’ (2012). R. Nayga, & V., Caputo, M., Aprile, warm-glow of theory A goods: public to donations and altruism Impure (1990). J. at Andreoni, and competition quality Environmental Available (2004). M. Ollikainen, & E., Koskela, S., G. Amacher, mecha- market the and uncertainty Quality "lemons": for market (2019). The (1970). A. G. Akerlof, Accreditation Carbon Airport determi- Personal (2009). V. G. Huylenbroeck, & K., Mondelaers, W., Verbeke, J., Aertsens, References oiia Weekly Political Economics wr consumers. aware foods. gm on india from evidence experimental labels: of programs. us of meta-evaluation 419–445. goods. public of provision private the countries. ance. competition. imperfect and labels. Studies farming Consumer organic of and indication geographic european the of case giving. eco-labeling. nism. airportcarbonaccreditation.org/ review. a consumption: food organic of nants Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. ora fEooi eair&Organization & Behavior Economic of Journal h urel ora fEconomics of Journal Quarterly The h cnmcjournal economic The 86,701–722. 18(6), , ora fDvlpetEconomics Development of Journal ora fEvrnetlEooisadManagement and Economics Environmental of Journal p.167–173). (pp. , ora fEvrnetlEooisadManagement and Economics Environmental of Journal 62,158–165. 36(2), , Comment citer cedocument: 0(0) 464–477. 100(401), , uoenAscaino niomna n eoreEconomists Resource and Environmental of Association European

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9 668–680. 49, , 42,483–504. 64(2), , (2,1–9. 8(12), , 33 () 407–427. 6(1), , ora fArclua Economics Agricultural of Journal 1 1066. 81, , sgt ulsigLimited. Publishing Ashgate . 62,145–162. 56(2), , oetPout Journal Products Forest ora fAgricultural of Journal 72,140–150. 27(2), , clgclEconomics Ecological 33,39–359. – 339 43(3), , aainJournal Canadian 62(3), , Food , , International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint u . eg . og . oe . i,Y 21) hns osmr’wligest pay to willingness consumers’ Chinese (2012). Y. Liu, & T., Lone, Q., Fong, Y., Zeng, P., more. Xu, is less when claims: health Front-label (2004). M. C. Hasler, & T., S. Sonka, B., Wansink, green and producers, heterogeneous certification, Green (2017). Y.-M. Chang, & J. Walter, consumption: eco-friendly and labeling Food (2014). L. Vranken, & T., Jiang, P., Vlaeminck, clubs. Green (2011). J. M. Kotchen, of & valuation K. Veld, Consumers’ Van’t (2014). W. Verbeke, & M., R. Nayga, V., Caputo, J., E. Loo, Van Sustain- (2015). W. Verbeke, & B., Zhang, H.-S., Seo, M., R. Nayga, V., Caputo, J., E. Loo, Van sustainable’ ‘mildly position to How (2015). C. H. Trijp, van & R., A. Fischer, E., Herpen, van & M., Sottomayor, M., Miele, P., Jones, G., Holt, C., Cowan, L., Costa, R., Bennett, R., Tranter, expenditures. local of theory pure A (1956). M. C. Tiebout, protectionism. and protection, environmental scheme, Eco-labelling (2004). H. Tian, purchase in eco-labels to attention paying of determinants Psychological (2000). J. Thøgersen, e trar,J 20) osmr’wligest-a o rai ovringaefood: conversion-grade organic for willingness-to-pay Consumers’ (2009). J. Vestergaard, Preference rdcs h on mato sotetdslyadpiesetting. price and display assortment of impact joint The products: odPolicy Food o re-adeolbldseafood. eco-labeled and green- for 333–361. 52(3), regulations. environmental of analysis welfare a consumers: 190. – 180 C), supermarket. belgian a from evidence Experimental Management meat. on labels sustainability to attention visual and willingness-to-pay attributes. preferences, Consumer coffee: on labels ability countries. eu five from Evidence 416–424. d’économique canadienne Economics/Revue of Journal 313. – 285 validation. multinational and development Model decisions: Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. 6 6–32. – 26 46, , 96,659–667. 29(6), , clgclEconomics Ecological 23,309–322. 62(3), , Comment citer cedocument: odPolicy Food 1() 215–225. 118(C), , odPolicy Food

odControl Food 9P) 137–150. 49(P1), , 34 43,27–294. – 287 34(3), , 81,7 82. – 74 28(1), , 63,608–633. 36(3), , ora fEvrnetlEooisand Economics Environmental of Journal clgclEconomics Ecological ora fpltcleconomy political of Journal ora fRgltr Economics Regulatory of Journal ora fCnue Policy Consumer of Journal 108(Supplement , odQaiyand Quality Food Canadian 64(5), , 23, , , International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint eueasml,syie rmwr.Mn xesosaepsil.Teasmtosaethe are assumptions The possible. are extensions Many framework. stylized simple, a use We hsfie e/oti ukfrafimicrigi.Ti etfiaini h nyceil a to way credible only the is certification This it. incurring firm a for sunk is fee/cost fixed This oiy aeywehro o opooemnaoycricto suywt grs2 figures with (study certification mandatory propose to not or whether namely policy, of price hie n eiin ocriyaedfie ybcwr nuto ne ugm perfect subgame a under induction backward by Price equilibrium. defined duopoly). are under certify competition to price decisions a and In (with choices prices results. set certification simultaneously the firm(s) observing 3, consumer no stage with every and “high-quality and (e.g., funds firm products every public these with certify produce of certification”), to to cost not not or or opportunity whether whether no choose and products simultaneously is producers high-quality there 2, simplicity, stage In of regulation. sake of cost the For 3). and firms. other or consumers to quality signal charges agency certification fee/cost This fixed label. a the by signaled high-quality the regarding certification quality a denoted of is unit one buys who consumer A unity. at normalized uniformly is the consumers by of described mass is which quality, the for parameter pay distributed to willingness her or his in differs ter firms. other or consumers known by is observed commodity not each is of but quality firm specific each The by zero. is products low-quality producing of is products high-quality producing of cost entry firms’ studied. the not are detail that not costs do We fixed a products. other or producing to situation firms related monopoly 2 a or either 1 consider namely We situation, period. duopoly single a in occurs trade simplicity, For assumptions The following. Appendix k Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. h igerudo rdn rcesi tgs nsae1 h euao eet its selects regulator the 1, stage In stages. 3 in proceeds trading of round single The credible and perfect a provide to able is agency certification one only that assume We parame- The good. the of unit one only purchase to want and neutral risk are Consumers marginal the that assume We products. low-quality or high produce to choose can Firm(s) > 0 p ersnsteqaiylvlo rdc.Acnue a T qa to equal WTP a has consumer A product. a of level quality the represents a nidrc tlt qa to equal utility indirect an has k h n h o-ult sdenoted is low-quality the and C ofims o urneigtecricto rdblt eae otelabel. the to related credibility certification the guaranteeing for firm(s) to θ ∈ Comment citer cedocument: [ ,1 0, ] o h aeo ipiiyadwtotls fgnrlt,the generality, of loss without and simplicity of sake the For .

θ k h − 35 > k p l with , 0 .Tehigh-quality The 1978). Rosen, & Mussa (see n eaieylw hl h agnlcost marginal the while low, relatively and k h > k l > 0. θ k k ta at but International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint ihtelbl sso sisprofit its as soon as label, the with sabssfrteaayi htflos rtcnie h cnroweeqaiycertification quality where scenario the consider first follows, that analysis the for basis a As ( ult rvosyselected. previously quality W ohn sipsdsince imposed is nothing For quality. high of inequality the mandatory, the when for certification, label the the and choose label not mandatory does the monopolist impose to chooses regulator the 1, stage case. duopoly the with below detailed guaranteeing to equal profit equilibrium an to to equal products certified for cost marginal the and of level given a for determined is 3 stage at price The 1. and 0 between distributed uniformly parameter preference the by identified is nothing buying and product a quality a quality purchase a knowingly we For would 2), consumer 3). (stage (stage certification decision and price high-quality the choose study to incentive firm’s the studying Before monopoly under Certification duopoly. the and monopoly at available be certification credible will 1970). no products Akerlof, is (see low-quality there point only as this cost, outcome, lower this their expect of fully because Consumers case, offered. this In exist. not does certification of absence The C CS π θ p k ml ml < − − mh Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. dtistergltrscoc aiiigtewlaeudrmnpl.At monopoly. under welfare the maximizing choice regulator’s the details 3 Figure products its certify and products high-quality selects voluntary monopolist is the optimum 2, stage the At at profit the products, low-quality the selects monopolist the When cost certification the incurs it products, high-quality selects monopolist the When the namely configurations, two the consider next we available, is certification a When hc orsod oteconstraint the to corresponds which , = C h p = )( ,wihlast eadfrapoutof product a for demand a to leads which ), 1 k twsasmdthat assumed was It 3. and 1 figures on represented , l 1 Z 4adtesrlsis surplus the and /4 − p k 1 m h ( p θ / k π k h mh h − ) − p > m C C ) π eutn na qiiru price equilibrium an in resulting , d < ml h θ Comment citer cedocument: osmr nwta ihqaiyi fee.Wt demand a With offered. is high-quality that know consumers , W C ( = and 3 π ml h inequality the , mh k CS > h C − 1 − 1 W π ml π − C h > mh mh mh

) = p 2 > . / sgetrthan greater is 0 /8 ( = k wl be will 1 figure on represented frontier other The . k π l h 8.Teoealwlaeis welfare overall The . /8 k h oooitchooses monopolist the , ml h vrl efr is welfare overall The . k C C h − > − π < 36 C mh h C C ) k 1 sawy aifid urnyn h choice the guarantying satisfied, always is 2 3 h osmridfeetbtenbuying between indifferent consumer The . > k n hntewelfare the when and / hnlbl are labels When 3. figure on represented , Z n price a and 4 θ ˜ π 0 kh 1 ml d svr fe aifid When satisfied. often very is − θ hc orsod oteconstraint the to corresponds which , = C p h osmr’srlsi then is surplus consumers’ The . m 1 − ( = p h p / k W hsnb h monopolist, the by chosen a eaieylwalways low relatively was h k W mh ic h parameter the since , + p ml omxmz t profit its maximize to h = ) = / W CS θ 2 ˜ CS hspieleads price This . mh = mh ml sgetrthan greater is p + / + k π π sc that (such mh ml C . . > θ C is C 3 , International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint rdcs h constraint The products. h frontier firms. The 4 . and 1 figures prices, equilibrium to leads maximization profits The products. low-quality with firm the and cost certification the and products high-quality namely profits, following the is products low-quality for demand is product the high-quality for parameter demand the the Since distributed, uniformly purchasing. not and low-quality consuming between indifference product by low-quality and defined products is high-quality between indifferent consumer the case, this certification of cost to equal price a With firm. – each to by equal cost incurred loss marginal is a the cost to certification and this zero when to firm, equal each profit gross for a C to leading products high-quality the select 1. and 0 is between welfare distributed the to equal also surplus consumers’ the fees fixed/sunk for accounting not profits marginal gross quality, to zero. same prices are the reduces offer quality the firms of to both homogeneity leads When The firms both cost. cost. by marginal quality the same to the equal of price selection same the 3, stage at competition price Under duopoly under Certification π k p ( l k h dh ( h ∗ k 2 Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. − tsae2 n r outr eet h ae n etf t rdcs sso sisprofit its as soon as products, its certify and label the selects voluntary firm one 2, stage At the pay and products high-quality produce can firm one only competition, price Under fee fixed the of Because and zero are profits the zero, to equal is price the products, low-quality select firms both If n h efr is welfare the and h osmr’srlsis surplus consumers’ The CS 2 π π h and sgetrta ,crepnigt h rfi hnbt rscos h low-quality the choose firms both when profit the to corresponding 0, than greater is k + h dh dl h dhl ) = 6 [ = 2 p hk = l n h efr ol eeulto equal be would welfare the and k ∗ h 2 h tteeulbim h rfisare profits the equilibrium, the At . k k Z − l h p ( k ( l θ h p 3 ¯ k ∗ k h k h h h ∗− h ( = − 2 − − k p )] h l l ∗ h osmr’srlswudb qa to equal be would surplus consumers’ the , /2 k C k ( p l l θ ) + h W u oapstv rfi ntesgeto ihqaiypout.In products. high-quality of segment the on profit positive a to due ( k k − l − dhl Comment citer cedocument: h h − ) h − p 2 π ( p = l / 2 ) C dh l k ∗ ( / k l π k )( ) C h eae otecricto,bt rscno simultaneously cannot firms both certification, the to related π ( > h d k dh 2 − dh 4 θ − h k dtiigtepiaeicnie of incentives private the detailing 1 figures complements + 0 + k − h ( = k l

− )] orsod oteconstraint the to corresponds l π Z k )( 2 l p dl k p 1 ) h / k 4 h l ∗− h parameter The . h k + ) ( − ( 2 h − k k p p l l h CS − ∗ h h − ( − θ ) k 37 W dhl 1 k l k ) p h l − dh 2 )( l − ) [( / 4 = CS p k ( p π h h k CS h ∗ dl h dl − − ) − d = dh = k θ p l k ) − l θ p Z l ˜ = ) 2 ) l 0 / (( − 2 = 1 − k ( C θ k p h C k . p [ h h 1 p k l l d − l − ) 2 l CS − / / ( θ k 2 k p ( [( C = l dh h l k l ensteconsumer the defines , )] ) p l − ohfim maximize firms Both . / < k h = − l ( 5 − / k k C Z C 2 h h h p 2 with , + ) − 1 / o h r with firm the for ersne on represented , l ) k h / k ( l 4 ( θ ) k k k − h h θ h ( − uniformly − k p h l k / h − l ) )] k d l h θ ) and θ ) k for 2 = is + International Reviewof Environmental andResource Economics,13 (1-2),119-163. ,DOI:10.1561/101.00000107 Version preprint etfiainwt subsidy a for with label certification the choose not does firm one products. low-quality when label the choosing funds. public of cost profits. opportunity their no maximizing is and there products that their Recall differentiating for low-quality, the one, price other a to leading standard products high-quality high-quality to a selecting equal select firms to both and having firm, for quality, each low to banning C cost certification the subsidize fully to when high-quality and label the choosing than firms both have to likes regulator the Yokessa, M.,Marette, S.(2019).AReview ofEco-labels andtheir EconomicImpact. o eaieyhg auso h etfiaincs,tergltrlkst aeoefirm one have to likes regulator the cost, certification the of values high relatively For 1, stage At dupoly. under welfare the maximizing choice regulator’s the details 4 Figure W dhl h hc orsod to corresponds which , ihu hshg-ult tnad r ol eettehg-ult n the and high-quality the select would firm 1 standard, high-quality this Without . W dhl Comment citer cedocument: W dhl > S CS uhthat such sgetrthan greater is dl C orsodn to corresponding <

C C 4 π When 4. figure on represented , > dh C + 2 CS 38 n when and S dl > hti h efr hnbt rschoose firms both when welfare the is that and 0 C < C S C en h oetpsil level. possible lowest the being < 5 When 4. figure on represented is C 5 h euao usdzsthe subsidizes regulator the , C < C 4 W ti optimal is it , dh sgreater is