Are Eco‐Labels Valuable? Evidence From the Apparel Industry

Abstract

Environmentally friendly labels, or eco-labels, have begun appearing on products in the United States and Europe as a manifestation of industry efforts to be perceived as environment-friendly. This study investigates the extent of market valuation of the environmental claims made by apparel manufacturers. Disciplines ABSTRACTUsing U.S. apparel catalogue data, we estimate hedonic price functions to identify market valuation of environmental attributes of apparel goods. We identify a significant and robust premium for the organic fibers embodied in the apparel goods. We also find a discount for the "no-dye" label. We do not, however, find any evidence of a premium for environment-friendly dyes. We further investigate the pricing behavior of apparel suppliers for potential heterogenous pricing of the organic-fiber attribute and find no evidence of different premia across firms.

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