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Authors:

• Nancy CHAU
  Cornell University

• Arnab K. BASU

• Ulrike GROTE

Why do some countries establish their own national eco-labeling programs and others do not? In this paper, we provide theoretical arguments and empirical evidence suggesting that the answer to this question can shed new light on three questions that have taken center-stage in the trade and environment debate: (i) does trade exacerbate the exploitation of the environment; (ii) are countries competing in export markets engaged in a race to the bottom in environmental performance; and (iii) do market-based environmental instruments benefit the rich and hurt the poor?