In this paper we analyze the effectiveness of eco-labels in reducing the supply of eco-unfriendly products. We focus on the situation where a labeled product is viewed by consumers as a private good and develop a theoretical model to pin down theinteraction between consumers' willingness to pay...

The paper examines the effectiveness of eco-labeling in providing a market-based solution to the under-consumption of eco-friendly products in developing and developed countries. The authors show that whether labeling is an effective device in solving the problem of asymmetric information...