Wasteful labeling

  • Mahenc P
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Abstract

The role of labeling is to solve the adverse selection problem caused by unsubstantiated claims from firms. The problem however is likely to remain unsolved if the labeling agency is not trustworthy. The agency can be suspected to divert the fees charged for labeling from their primary purpose of collecting information in order to raise excessive revenue. This paper addresses this issue and shows that labeling may be wasteful if the agency is likely to be untrustworthy. To award firms green labels, the agency may charge fees that exceed the Ramsey level at which the revenue needed for collecting information is raised with a minimal loss in terms of efficiency. [ABSTRACT FROM AUTHOR] Copyright of Journal of Agricultural & Food Industrial Organization is the property of De Gruyter and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Author-supplied keywords

  • Greenwashing
  • Labeling
  • Signaling

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Authors

  • Philippe Mahenc

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