Industrialists hand in hand with environmentalists: how eco-labeling schemes can help firms to raise rivals’ costs

• Autores: Gilles Grolleau, Lisette Ibanez, Naoufel Mzoughi
• Localización: European journal of law and economics, ISSN 0929-1261, Vol. 24, Nº 3, 2007, págs. 215-236
• Idioma: inglés
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• Resumen

  • Industrialists may promote eco-labeling schemes in order to gain the support of environmentalists and ultimately gain market protection. Beyond the environmental effects of such coalitions, these schemes can provide industrialists a legitimate way to disadvantage rivals, frequently foreign rivals, by raising their costs. We consider a Stackelberg model that determines the conditions under which a domestic firm has incentive to impose an eco-label in order to raise the costs of its foreign rivals. The effects of eco-labeling on domestic social welfare are ambiguous. Policy recommendations are drawn. Notably, factors that may help policy makers to identify situations more vulnerable to undesirable outcomes from a welfare viewpoint are developed.