European Journal of Law and Economics

, Volume 24, Issue 3, pp 215–236 | Cite as

Industrialists hand in hand with environmentalists: how eco-labeling schemes can help firms to raise rivals’ costs

  • Gilles Grolleau
  • Lisette Ibanez
  • Naoufel Mzoughi


Industrialists may promote eco-labeling schemes in order to gain the support of environmentalists and ultimately gain market protection. Beyond the environmental effects of such coalitions, these schemes can provide industrialists a legitimate way to disadvantage rivals, frequently foreign rivals, by raising their costs. We consider a Stackelberg model that determines the conditions under which a domestic firm has incentive to impose an eco-label in order to raise the costs of its foreign rivals. The effects of eco-labeling on domestic social welfare are ambiguous. Policy recommendations are drawn. Notably, factors that may help policy makers to identify situations more vulnerable to undesirable outcomes from a welfare viewpoint are developed.


Eco-labels Environmental protectionism Raising rivals’ costs 

JEL Classifications

L15 Q18 Q29 


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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Gilles Grolleau
    • 1
  • Lisette Ibanez
    • 2
  • Naoufel Mzoughi
    • 3
  1. 1.Department of EconomicsMontpellier SubAgroMontpellier Cedex 1France
  2. 2.LEF, UMR 356, INRANancy CedexFrance
  3. 3.Ecodéveloppement, UR 767, INRAAvignon Cedex 9,France

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