Ecological Labelling in North-South Trade

Arbeitspapier

We investigate in a horizontal product differentiation model with North-South trade the implications of a home bias in consumers' demand for labelled goods. We compare mutual recognition and international harmonisation of ecological labels with respect to firms' profits and welfare. Northern consumers perceive a warm glow from buying green, but have information problems with imported labelled products. Firms differ in labelling costs which could help a Southern firm to compensate for the home bias under mutual recognition. Under harmonisation the home bias disappears. Welfare analysis of harmonised labelling shows that a Southern firm gains from adopting a harmonised label { even if there is "eco-imperialism". Given the specific trade structure in our model, harmonisation is a beneficial regime except for the case that labelling costs reach a specific treshold.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 604

Classification and Topics

• Classification: Wirtschaft ; Oligopoly and Other Imperfect Markets ; Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth ; Trade Policy; International Trade Organizations ; Trade and Environment
• Subject: Ecological Labels ; Product Differentiation ; North-South Trade ; WTO Rules

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Althammer, Wilhelm ; Dröge, Susanne
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/18497
• Last update: 10.03.2025, 11:44 AM CET