Ecolabels and international trade in the textile and apparel market

W. Nimon, J. Beghin

Research output: Contribution to journalArticlepeer-review

31 Scopus citations

Abstract

We provide a formal analysis of the welfare and trade implications of ecolabeling schemes. We couch our analysis in the context of a stylized model of the textiles market between an industrialized North and a developing South. Textiles ecolabeling involves production-process standards, raising concerns of protectionism against the South. We investigate several labeling scenarios (labeling by North, labeling by both North and South, and harmonization). We consider a large home country, the North, that imports conventional textile goods from the South and produces import-competing conventional textiles as well. Both the North and the South exhibit increasing marginal cost of textile production. Trade is initially distorted by the North's import tariff, as would be the case in the real world. In the absence of information on process standards, equilibrium in the textiles market does not allow 'green' credence attributes to emerge. Next, we review important stylized facts and issues associated with ecolabel schemes. Then we present a parsimonious model that incorporates these stylized facts. Following that, we analyze the two ecolabeling cases described previously and summarize numerical comparative-statics results pertaining to the harmonization of labels. Finally, we present conclusions.

Original languageEnglish (US)
Pages (from-to)1078-1083
Number of pages6
JournalAmerican Journal of Agricultural Economics
Volume81
Issue number5
DOIs
StatePublished - 1999
Externally publishedYes

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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