Details
| Original language | English |
|---|---|
| Pages (from-to) | 228-247 |
| Number of pages | 20 |
| Journal | Review of development economics |
| Volume | 7 |
| Issue number | 2 |
| Publication status | Published - 8 Apr 2003 |
| Externally published | Yes |
Abstract
The paper examines the effectiveness of eco-labeling in providing a market-based solution to the underconsumption of eco-friendly products in developing and developed countries. The authors show that whether labeling is an effective device in solving the problem of asymmetric information between sellers and buyers, or whether false labeling severs the link between willingness to pay and environmental conscious production choices, depends crucially on how monitoring intensities respond endogenously to economic growth, openness to trade, and technology transfers. In particular, by accounting for endogenous policy responses to economic growth, it is shown that an inverted-U relationship exists between consumer spending on ecounfriendly products and national income. In addition, while international trade unambiguously benefits the environment in the presence of eco-labeling with perfect enforcement, trade openness may nevertheless delay the turning point of the growth and environment relationship, when the cost of enforcement falls disproportionately on developing countries, and when environmental policies are employed to reap terms-of-trade gains.
ASJC Scopus subject areas
- Social Sciences(all)
- Geography, Planning and Development
- Social Sciences(all)
- Development
Sustainable Development Goals
Cite this
- Standard
- Harvard
- Apa
- Vancouver
- BibTeX
- RIS
In: Review of development economics, Vol. 7, No. 2, 08.04.2003, p. 228-247.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Eco-labeling and stages of development
AU - Basu, Arnab K.
AU - Chau, Nancy H.
AU - Grote, Ulrike
PY - 2003/4/8
Y1 - 2003/4/8
N2 - The paper examines the effectiveness of eco-labeling in providing a market-based solution to the underconsumption of eco-friendly products in developing and developed countries. The authors show that whether labeling is an effective device in solving the problem of asymmetric information between sellers and buyers, or whether false labeling severs the link between willingness to pay and environmental conscious production choices, depends crucially on how monitoring intensities respond endogenously to economic growth, openness to trade, and technology transfers. In particular, by accounting for endogenous policy responses to economic growth, it is shown that an inverted-U relationship exists between consumer spending on ecounfriendly products and national income. In addition, while international trade unambiguously benefits the environment in the presence of eco-labeling with perfect enforcement, trade openness may nevertheless delay the turning point of the growth and environment relationship, when the cost of enforcement falls disproportionately on developing countries, and when environmental policies are employed to reap terms-of-trade gains.
AB - The paper examines the effectiveness of eco-labeling in providing a market-based solution to the underconsumption of eco-friendly products in developing and developed countries. The authors show that whether labeling is an effective device in solving the problem of asymmetric information between sellers and buyers, or whether false labeling severs the link between willingness to pay and environmental conscious production choices, depends crucially on how monitoring intensities respond endogenously to economic growth, openness to trade, and technology transfers. In particular, by accounting for endogenous policy responses to economic growth, it is shown that an inverted-U relationship exists between consumer spending on ecounfriendly products and national income. In addition, while international trade unambiguously benefits the environment in the presence of eco-labeling with perfect enforcement, trade openness may nevertheless delay the turning point of the growth and environment relationship, when the cost of enforcement falls disproportionately on developing countries, and when environmental policies are employed to reap terms-of-trade gains.
UR - http://www.scopus.com/inward/record.url?scp=0038742992&partnerID=8YFLogxK
U2 - 10.1111/1467-9361.00188
DO - 10.1111/1467-9361.00188
M3 - Article
AN - SCOPUS:0038742992
VL - 7
SP - 228
EP - 247
JO - Review of development economics
JF - Review of development economics
SN - 1363-6669
IS - 2
ER -