Eco-labeling and information asymmetry: a comparison of five eco-labels in the Netherlands

Eco-labels have become commonplace instruments of self-regulation. This paper analyzes five food labels with respect to the reliability of their information. A new method to analyze reliability is developed. For each label, four aspects are examined: (1) mention of biodiversity; (2) reference to rule of law to assure buyers’ confidence; (3) notification of farmers’ compliance; and (4) information on ecological impact. The analysis reveals that eco-labels fail to communicate adequately; they do not diminish the information gap between seller and buyer. The main shortcomings of the eco-labels were found in their ambiguity about environmental themes, their failure to assure the buyer about the product's ecological impact, the insufficient information about producers’ compliance, and presence of recommendations.