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Eco-Labeling and Asymmetric Information: Environmental Technology Adoption |
Ming-Chung Chang Jin-Li Hu |
Working Paper |
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Asymmetric information always affects the firm¡¦s decision. This paper investigates an impact for firm to adopt the eco-label on the abatement of emissions in a market where one of firms has asymmetric information and both firms¡¦ products have an imperfect substitutability. We find that the market effect of the eco-label may be larger than the cost effect under the case of eco-label on a low abatement of emissions. At this time, it is benefit for firm to engage the R&D on an eco-label early. And a large product¡¦s substitutability obstructs the firm without the clean-technology to engage the R&D on an eco-label. Finally, the overinvestment on R&D in the private section is likely to occur when the monetary value of environmental damage of emissions is small. |
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