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Title:Ecological Labelling in North-South Trade PDF Logo
Authors:Althammer, Wilhelm
Dröge, Susanne
Issue Date:2006
Series/Report no.:DIW-Diskussionspapiere 604
Abstract: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.
Subjects:Ecological Labels
Product Differentiation
North-South Trade
WTO Rules
JEL:L13
Q56
F13
F18
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

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