A MARKET SOLUTION TO GREEN MARKETING - SOME LESSONS FROM THE ECONOMICS OF INFORMATION

Strong consumer demand for environmentally benign products has created a ''green marketing'' advertising phenomenon. Legislators, bureaucrats, and academics have increasingly advocated regulating sellers' green claims, because they fear that deceptive advertising of environmental attributes will cause consumers to make purchasing decisions that retreat from environmental policy goals. As a result, some states have adopted regulations that impose uniform definitions on commonly used green claims, and others have considered introducing ''eco-logos'' for environmentally preferred products. In this Article, Professor Church argues that enacting advertising regulations to accomplish environmental goals will deter manufacturers from touting useful information concerning their products and result in inefficient administrative costs. Professor Church analyzes the market for environmental information using the economics of information as a paradigm. He illustrates that, contrary to the premise underlying regulation of green claims, the market for environmental information operates efficiently. Consumers have many sources by which to evaluate the merits of sellers' green claims. Furthermore, the development of an efficient market has created a critical mass of sophisticated consumers that will force manufacturers, through its purchasing decisions, to supply products with desired environmental attributes as well as truthful information concerning those attributes. Professor Church concludes that the only legitimate goal of regulating green claims is to prevent deceptive advertising on a case-by-case basis.