Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192314 
Authors: 
Year of Publication: 
2002
Series/Report no.: 
Discussion Papers No. 332
Publisher: 
Statistics Norway, Research Department, Oslo
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.
Subjects: 
Eco-labels
strategie environmental
policy
trade
JEL: 
H7
Q2
R3
Document Type: 
Working Paper

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