International Review of Environmental and Resource Economics > Vol 13 > Issue 1-2

A Review of Eco-labels and their Economic Impact

Maïmouna Yokessa, UMR Économie Publique, AgroParisTech, Université Paris-Saclay, France, maimouna.yokessa@inra.fr Stéphan Marette, UMR Économie Publique, INRA, Université Paris-Saclay, France,
 
Suggested Citation
Maïmouna Yokessa and Stéphan Marette (2019), "A Review of Eco-labels and their Economic Impact", International Review of Environmental and Resource Economics: Vol. 13: No. 1-2, pp 119-163. http://dx.doi.org/10.1561/101.00000107

Published: 26 Apr 2019
© 2019 M. Yokessa and S. Marette
 
Subjects
Environmental Economics,  Environmental Economics:Market-based Policy Instruments,  Information Chain Structure and Competition,  Regulation
 
Keywords
JEL Codes: D8L1Q5
Environmentinformationconsumers' behaviorsfirms' strategies
 

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In this article:
1. Introduction
2. Characterization of Eco-labels
3. Market Incentives for Adopting Eco-labels
4. Limitations of Eco-labels
5. Regulation with Eco-labels
6. Conclusion and Future Research Perspectives
Acknowledgments
Appendix
References

Abstract

In many countries, various eco-labels have emerged for informing consumers about the environmental impact of the offered products. Using recent advances in the empirical and theoretical literature, this review questions the efficiency of eco-labeling. We combine a literature review with discussions of empirical examples. We underline the limitations of eco-labels for signaling credible information to consumers. In particular, both the complexity and the proliferation of eco-labels are likely to hamper their efficiency in guiding consumers. From a regulatory perspective, several studies show that eco-labels are useful, but they cannot be considered a panacea for improving environmental quality. Indeed, it is often socially optimal to combine eco-labels with other regulatory tools such as standards banning polluting products and tax/subsidy mechanisms depending on the environmental quality. The conclusion suggests research priorities for tackling unanswered questions.

DOI:10.1561/101.00000107