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But what does it mean? Competition between products carrying alternative green labels when consumers are active acquirers of information
journal contribution
posted on 2023-06-09, 19:20 authored by Anthony Heyes, Sandeep Kapur, Peter W Kennedy, Steve Martin, John W MaxwellPrograms that certify the environmental (or other social) attributes of firms are common. But the proliferation of labeling schemes makes it diffcult for consumers to know what each one means - what level of 'greenness' does a particular label imply? We provide the first model in which consumers can expend effort to learn what labels mean. The relationship between information acquisition costs, firm pricing decisions, the market shares obtained by alternatively-labeled goods and a brown 'backstop' good, and total environmental impact prove complex. Consumer informedness can have perverse implications. In plausible cases a reduction in the cost of information damages environmental outcomes. Our results challenge the presumption that provision of environmental information to the public is necessarily good for welfare or the environment.
History
Publication status
- Published
File Version
- Accepted version
Journal
Journal of the Association of Environmental and Resource EconomistsISSN
2333-5955Publisher
University of Chicago PressExternal DOI
Issue
2Volume
7Department affiliated with
- Economics Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2019-10-14First Open Access (FOA) Date
2021-01-17First Compliant Deposit (FCD) Date
2019-10-11Usage metrics
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