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Eco-Labels as a Signal of Quality*

Published online by Cambridge University Press:  08 June 2012

Lester M.K. Kwong
Lester M.K. Kwong
Affiliation:
Department of Economics and Fellow of the Cool Climate, Oenology and Viticulture Institute, Brock University, 500 Glenridge Ave., St. Catharines, Ontario, Canada, L2S 3A1. email: [email protected]
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Abstract

Using a canonical model of signaling, we show that if the cost of organic viticulture is strictly increasing in the quality dimension, then the use of eco-labels as a signal for quality cannot possibly occur as an equilibrium outcome. Conditions for the existence of such a signalling equilibrium as well as some general properties regarding its configuration are herein characterized. (JEL Classification: L15, L66, M3)

Type
Articles
Information
Journal of Wine Economics , Volume 6 , Issue 2 , Autumn 2011 , pp. 179 - 192
Copyright
Copyright © American Association of Wine Economists 2011

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