Label Battles: Competition among NGOs as Standard Setters

Overview & Synopsis

This paper examines competition among NGOs that act as standard-setting organizations. We consider a double duopoly model wherein NGOs compete to offer firms labels for sustainability quality and firms compete to sell consumers differentiated products. We assume that NGO preferences for standard levels differ, with some being mission-driven organizations and others being market-driven organizations. We find that these two NGO types must have very different preferences to be present in the label market. Moreover, competition between these two types NGOs leads to a decrease in standard provided by mission-driven NGOs and an increase in overall weighted sustainability quality