Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319884 
Year of Publication: 
2025
Series/Report no.: 
BERG Working Paper Series No. 206
Publisher: 
Bamberg University, Bamberg Economic Research Group (BERG), Bamberg
Abstract: 
Although consumers often care about environmental quality, limited attention impairs consumers' perception of environmental quality. Environmental awards and labels make environmental quality salient and attract consumers' attention. We analyze how awards and labels affect firms' investments in environmental quality and social welfare. We show that, with an award, both firms invest in environmental quality; with a label, only one firm invests. Under awards, investments depend positively on salience. Under labels, investments depend non-monotonically on salience. A welfare-maximizing social planner prefers awards over labels if and only if marginal damage and salience are sufficiently high such that consumers overestimate the environmental quality of the goods.
Subjects: 
awards
environmental quality
labels
limited attention
salience
JEL: 
D91
L13
L15
Q52
Q58
Document Type: 
Working Paper

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