The paper analyses the economic consequences of labeling in a setting with two vertically related markets. Labeling on the downstream market affects upstream price competition through two effects : a differentiation effect and a ranking effect. The magnitude of these two effects determines who...

Are labels good or bad for consumers and firms? In this essay we analyze the label's nature as information revealing mechanism and explore the theoretical literature on labeling with respect to the following issues: i) the effects of labels on market structure, ii) the distortions due to the...