TY  - JOUR
AB  - Purpose The purpose of this paper is to find the optimal environmental quality criteria for a strategic eco-labeling authority with three objectives (i.e. maximizing the aggregate environmental quality, maximizing the industry profit and maximizing the social welfare). Particularly, the authors investigate how the existence of imperfectly informed consumers affects labeling criteria determination and competition among firms.Design/methodology/approach A game-theoretic modeling approach was adopted in this paper. A three-stage sequential game was modeled and backward induction was used to solve for a subgame perfect Nash equilibrium. To investigate the impacts of the existence of imperfectly informed consumers, the equilibrium, if all consumers are perfectly informed of the eco-label, was studied as a benchmark.Findings A more strict eco-labeling criterion improves revenues for both the labeled and unlabeled firms. It is interesting to find that the eco-labeling criteria to maximize industry profits are stricter than the criteria to maximize social welfare. Moreover, when the fraction of imperfectly informed consumers increases, the eco-labeling criteria to maximize aggregate environmental quality or industry profits will be more strict, while the criteria to maximize the social welfare will be looser.Originality/value The authors analyze the equilibrium strategies for firms against the eco-labeling criteria certified by authority with different objectives. The obtained optimal labeling strategies could provide insightful guidelines for the certifying authority to select the best suitable labeling criteria to achieve its goals.
VL  - 119
IS  - 6
SN  - 0263-5577
DO  - 10.1108/IMDS-06-2018-0256
UR  - https://doi.org/10.1108/IMDS-06-2018-0256
AU  - Fan Tijun
AU  - Song Yang
AU  - Cao Huan
AU  - Xia Haiyang
PY  - 2019
Y1  - 2019/01/01
TI  - Optimal eco-labeling strategy with imperfectly informed consumers
T2  - Industrial Management & Data Systems
PB  - Emerald Publishing Limited
SP  - 1166
EP  - 1188
Y2  - 2024/04/24
ER  -