Effects of Carbon Reduction Labels: Evidence from Scanner Data

Abstract

We investigate the effects of carbon reduction labels using a detailed scanner data set. Using a difference-in-differences estimation strategy, we find that having a carbon label has no impact on detergent prices or demand. We also investigate possible heterogeneous effects of carbon labels using the synthetic control method. We find no evidence to indicate that the prices for the counterfactual detergents without the label would have been any different from the prices of the carbon-labeled detergents. We investigate the reasons for these results and conclude that the specific design of the carbon label is responsible for its lack of success.