بازار سبز، گواهینامه محیط زیست و کلاهبرداری تعادلی

Consumers voluntarily pay significant price premiums to acquire unobservable environmental attributes in green markets. This paper considers the performance of eco-certification policy under circumstances where consumers cannot discern environmental attributes in goods, but are able to form rational expectations regarding the extent of illicit activities in the green market. The main results are: (i) fraud is less prevalent in green markets when entry barriers limit the number of firms; (ii) conventional environmental policies on polluting techniques increase the incidence of fraud, and can even preclude the use of non-polluting techniques which would otherwise emerge in green markets; (iii) voluntary eco-certification policies can decrease fraud, increase output, and raise profits per firm; and (iv) in cases where the socially optimal resource allocation can be supported, the optimal policy involves negative unit certification fees, positive fixed certification fees and is revenue-generating for the certifying agent.

Markets for environmentally-friendly goods and services are becoming increasingly common. Eco-certification programs now govern the sale of thousands of products in more than 20 countries [18] and [27] and green products account for approximately 9% of all new-product introductions in the United States [13]. Consumers pay significant price premiums for organic foods, for “green electricity”, for shade-grown and fair-trade coffee, and for various environmental attributes such as sustainable, recycled, non-toxic, biodegradable, and cruelty-free. One reason why consumers buy environmentally-friendly versions of products instead of cheaper, but otherwise equivalent versions is that consuming products that contain environmental attributes is gratifying. Consumers prefer environmental attributes in their products much like they prefer any other desirable product quality attribute in market goods. Green markets for environmental attributes are nevertheless different from other markets where product quality attributes are exchanged in two essential ways. First, consumer preferences for environmental attributes often depend on an aspect of production technology, for instance an inverse measure of pollution emissions, and this need not relate to any fungible consumptive qualities of the good. Unlike product quality attributes such as appearance, flavor and durability, which are generally revealed either pre-purchase or post-purchase, environmental attributes may never be perceived at all. This creates an opportunity for fraud in green markets that motivates third-party certification.1 Second, the products exchanged in green markets are frequently unbranded, as when fruit and vegetables from different producers are sold under a common organic label. This makes collective reputation issues important in green markets. This paper examines the performance of eco-certification policy in green markets with the potential for fraud. There are three key elements of the analysis: (i) consumer willingness-to-pay premiums exist for environmentally-friendly products; (ii) certification policy agglomerates firms in quality space under a common eco-label; and (iii) consumers are unable to discern environmental attributes in products, but can nonetheless form rational expectations regarding the overall extent of fraud in the market. Considerable evidence exists that fraud indeed occurs in green markets. The use of misrepresentative labels has been documented for “GMO-free” foods [3], for “ecofish” and “antibiotic-free” meats [7], and a number of firms have faced criminal prosecution for engaging in fraudulent sales of conventional products as organic (see, e.g., [8], [10], [14] and [23]).2 Information often also exists for consumers to form inferences on the overall quality of environmental attributes traded in green markets. A 1997 study by Consumer Reports detected traces of synthetic pesticides on 25% of organically-labeled tomatoes, peaches, green bell peppers, and apples [4], and the Seattle Post-Intelligencer recently reported a mix of 4–5% ordinary fish with environmentally sound seafood under a retailer's “ecofish” label [7]. Our analysis of fraud in green markets is framed by a vertical differentiated market structure in which a conventional good and an eco-friendly good differ according to a single, unobserved production attribute. This structure, which follows Mussa and Rosen [16], has several precursors in the literature on environmental quality provision under oligopoly. Ronnen [20] and Crampes and Hollander [5] consider minimum quality standards with a single low-quality firm and a single high-quality firm. A minimum quality standard, which forces the low-quality firm upwards in quality space, reduces the extent of product differentiation in the market, and this leads to pro-competitive effects. Amacher et al. [1] extend this framework to consider a technology investment stage. As is the case under a minimum quality standard, eco-certification policy generates socially beneficial effects by reducing product differentiation, which occurs when the low-quality firm is more efficient at investing than the high-quality firm. Here, we depart from this structure to consider two vertically differentiated markets—a “brown” market and a “green” market—each of which is comprised of multiple firms. Moreover, because our main focus is on collective reputation and fraud in the green market, we suppress the usual strategic duopoly interaction in vertical differentiation models by considering perfect competition among firms in the brown market. The model also relates to the literature on common traits (see, e.g., [2], [26] and [15]). In these models, collective reputation develops among members of a group and becomes a public good. Unobserved shocks generate informational externalities among members of the group, but these externalities disappear over time as the common trait is learned. That is, individuals develop reputations. The present paper relates to this literature in the sense that firms sharing a common eco-label develop a collective reputation; however, the element of individual reputation is notably absent. This is because firm-specific information is never revealed to consumers, even through repeated purchase.3 We study both an oligopoly structure with an exogenous number of firms and a monopolistically competitive equilibrium in the green market. Our results relate to product “purity”, which we define as an inverse measure of fraud in the green market. The main findings of the paper can be summarized as follows. First, industrial structure has an important influence on purity in green markets. When the number of firms serving the green market is “small”, individual incentives to free-ride on the collective reputation of the eco-label are tempered, and this facilitates the provision of product purity. As in [12], there is an interesting policy tension between non-compliance (impurity) and market power. Second, eco-certification costs generally have desirable effects on green market performance. Under oligopoly, unit certification costs raise both purity and profits per firm in the green market, and thus provide a motive for voluntary compliance that does not rely on individual reputation. Under monopolistic competition, fixed certification costs serve as a barrier to entry in green markets, but higher fixed costs nevertheless tends to increase output and purity. Third, traditional environmental policies that tax brown techniques and subsidize green ones increase the incidence of fraud. Indeed, the traditional policy approach causes equilibrium fraud to emerge in green markets under circumstances where it otherwise would not. Fourth, an eco-certification policy involving a combination of fixed certification charges and per unit certification fees has the potential to achieve the socially optimal resource allocation. For parameterizations of the model for which this is feasible, the optimal policy involves negative unit certification fees, positive fixed certification fees and is revenue-generating for the certifying agent. Finally, when fraud detection is endogenous, monitoring and enforcement activities can deter illicit activities, but are no more effective in eliminating fraud than eco-certification policies which do not involve any monitoring and enforcement at all. The paper is organized as follows. Section 2 formulates a model of consumer demand in green markets. Section 3 characterizes the social optimum. Section 4 considers the oligopoly and monopolistically competitive equilibria in the green market under various combinations of environmental regulations and eco-certification policies. Section 5 examines monitoring and enforcement strategies and Section 6 concludes.

Both the literature on environmental regulation and the emerging literature on eco-certification focus on one of two circumstances: (i) cases where fraud does not exist; and (ii) cases where monitoring and enforcement actions uniquely target illicit behavior. This paper has relaxed these conditions by considering the linkages between policy and equilibrium fraud and between purity and detection. The analysis revealed that environmental policies designed to emphasize green techniques increase the extent of fraud in the economy—and may even cause illicit activities to emerge in markets where they otherwise would not. Eco-certification policy, which raises the cost, rather than subsidizes the use of green techniques, reduces equilibrium fraud, and this generally produces desirable welfare effects in green markets. However, the extent to which social welfare can be improved through the use of eco-certification policy depends on the sensitivity of the detection probability to increases in monitoring effort. The performance of eco-certification policies depends on green market structure. In oligopoly markets where fraud does not occur, for instance due to a high cost of disguising it, unit eco-certification costs reduce output and lower profits per firm; however, when an element of impurity exists in the oligopoly equilibrium, positive unit eco-certification costs deter fraud and profits per firm rise in response. Eco-certification fees can thus provide a profit motive for voluntary certification, even in industry settings where reputation effects are unimportant. The findings in this paper point to an interesting nexus between antitrust regulation, international trade, and eco-certification policy. In markets with unit purity, policies that reduce industry concentration, for instance merger prevention, have desirable pro-competitive effects on output and prices. In markets with a degree of equilibrium fraud, however, policies that reduce industry concentration generally decrease both product purity and output in green markets, producing clear anti-competitive effects. Indeed, it is possible that conventional antitrust policies designed to facilitate market competition lead to green market foreclosure. In the international trade literature, mandatory national eco-certification schemes are generally viewed as non-tariff trade barriers.19 Nevertheless, such policies can also serve a valuable role in facilitating product purity. National requirements that involve fixed eco-certification costs have the potential to increase global output (see Table 1) and can thereby promote, rather than prevent, the international trade of green products. It should be noted that our results rely on a uniform distribution of consumer preferences for environmental attributes. While a non-uniform distribution of environmental tastes would not alter the main qualitative results of the paper, the shape of the distribution can have important normative implications for policy. To the extent that our analysis has overemphasized the tails of the preference distribution, the socially optimal resource allocation may involve a degree of impurity in green products. Multiple equilibria are also possible where green markets serve those with mild preferences separately from “fanatics”. An interesting possibility for future research is to examine the performance of various eco-certification policies under endogenous detection. The relationship between market purity and the detection rate has particularly interesting implications for the design of efficient monitoring programs in second-best policy settings. Removing detected fraudulent output from a market can generate covariance between monitoring frequency and market price(s), and this creates a link between compliance and the degree of randomization of monitoring effort. It is possible that cost-neutral changes in an inspection profile that increase the variability of the monitoring effort, for instance through less frequent but proportionately more comprehensive inspections, have desirable compliance implications for the control of fraud.