The authors provide a formal analysis of the welfare and trade implications of eco-labeling schemes. They present a simple model of vertical (quality) differentiation that captures stylized features of the textiles market in which trading takes place between an industrialized North (domestic) and a developing South (foreign). The paper investigates several labeling scenarios--labeling by North, labeling by 130th North and South, and harmonization of 170th labels--and draws conclusions about their impact on consumers.
This working paper was published as Nimon, Wesley and John C. Beghin, "Ecolabels and International Trade in the Textile and Apparel Market," American Journal of Agricultural Economics 81 (1999): 1078–1083, doi:10.2307/1244087.
Nimon, Wesley and Beghin, John C., "Eco-Labels and International Trade in Textiles" (1999). CARD Working Papers. 228.