Eco-label Adoption in an Interdependent World

Monteiro, Jose-Antonio (2010): Eco-label Adoption in an Interdependent World.

Abstract

The growing popularity of national efforts to promote eco-labeling raises important questions. In particular, developing countries fear that the eco-label can deliberately impose the environmental concern of (high income) importing countries on their production methods. Yet, empirical studies of the adoption of eco-labelling schemes at the cross-country level are scarce due to the lack of data availability. In this paper, the decision to introduce an eco-label is analyzed through a heteroskedastic Bayesian spatial probit, which allows the government’s decision to introduce an eco-label to be influenced by the behaviour of the neighbouring countries. The estimation is performed by extending the joint updating approach proposed by Holmes & Held (2006) to a spatial framework. Empirical evidence highlights the importance of a high stage of development, innovation experience and potential scale effects in the implementation of an eco-label scheme. In addition, results confirm the existence of a strategic interdependence in the eco-label decision.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bayesian Spatial Probit, International Trade, Environmental Policy, Eco-labelling
• Subjects: F - International Economics > F1 - Trade > F18 - Trade and Environment; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C25 - Discrete Regression and Qualitative Choice Models ; Discrete Regressors ; Proportions ; Probabilities; C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C11 - Bayesian Analysis: General

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