Eco-labels, production related externalities and trade
Working paper
Åpne
Permanent lenke
http://hdl.handle.net/11250/180471Utgivelsesdato
2002Metadata
Vis full innførselSamlinger
- Discussion Papers [1002]
Sammendrag
Abstract:
We analyze the trade and welfare effects of eco-labels in a domestic market with one domestic firm and one foreign firm. Pollution is production related, and the government can choose between including the product category in an eco-label scheme and setting an environmental standard. The environmental standard will only apply to the domestic firm, while both firms can adopt the eco-label. Given that the environmental damage is not too large, we find that it is optimal for the government to introduce an eco-label scheme. An eco-label scheme is optimal even though the domestic firm may loose profit and the foreign firm may gain. Hence, the eco-label scheme is not introduced for protectionist purposes. Further, if the government for some reason were prevented from using eco-labels, global, domestic and foreign welfare would be hampered.
Keywords: Eco-labels, strategie environmental, policy, trade