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Asymmetric information, Eco-labeling, Environmental economics, Signaling, Testing, Q5, D8, L15,

The chemistry of a first‐order stream in Amherst, ME, with a catchment area of 103 ha has been strongly altered as a result of road salt application at a rate of approximately 4 t of NaCl per year in the lower 15% of the catchment. Downstream from the road, elevated stream Cl is accompanied by elevated Ca, K, Mg, and Na. The chemistry of the stream was deconstructed to identify the impact of the salt on total stream chemistry. Components quantified include precipitation (including dry deposition), chemical weathering, road salt, and cation exchange. Sodium from the road salt displaces Ca, K, and Mg from the soil on an equivalent basis. The displacement was at a maximum in late Fall and early Spring, indicating a long residence time for the NaCl. The exchange process was reversible. With continued loading of NaCl the water chemistry should reach a steady state such that Na and Cl move through the soil in a relatively conservative way, when the soils are at equilibrium with elevated concentrations of Na. Concentrations of Ca, K, and Mg in stream water should concurrently return to pre‐salting values under the new steady state.

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Firms would like to capitalize on consumers' willingness to pay more for goods that use environmentally friendly production techniques, but have difficulty credibly conveying their environmental friendliness. One possible remedy is Becolabeling,^where a third party certifies firms' products. To model this phenomenon, I analyzed a market characterized by asymmetric information in which firms decide whether to seek an ecolabel. Market equilibrium is discussed in three settings: where both technologies and outputs are fixed (so the only choice is whether to seek certification), where technologies are fixed but outputs are not, and where firms can choose both technology and output.

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