Improving Eco-labelling as an Environmental Policy Instrument: Knowledge, Trust and Organic Consumption

Eco-labels have an import role in promoting green consumption. Most eco-labelled products are credence products. The valued process attributes they contain are not observable characteristics even after purchase or consumption and therefore the consumers rely heavily on eco-labels as a guarantee that these attributes are actually delivered when the product is purchased and consumed. However, the label will only have the desired effect if the consumers know the production standards underpinning it and have trust in the label. We test this hypothesis using organic food as our example. The empirical results obtained on the basis of our analysis of detailed survey data from Denmark show that the higher the level of knowledge of labelling attributes, the more likely consumers are to buy organic food. The impact of knowledge is both direct and indirect since part of the effect is transmitted through consumers’ trust in the eco-label