Putting carbon labels on products can actually backfire and fail to cut emissions when people are buying stuff that goes together.
March 24, 2026
Original Paper
<p>Carbon Labeling Strategy for Substitute and Complementary Products on Online Retail Platforms</p>
SSRN · 6326438
The Takeaway
While carbon labeling is generally seen as a win-win for sustainability and consumer choice, this model shows it backfires for products used together (like printers and ink). For these items, labeling can lead to pricing shifts that reduce firm profits and consumer surplus without actually achieving the intended environmental benefit.
From the abstract
<span>Given the pressure of sustainable transition, firms face significant challenges in optimizing their operational strategies to align with decarbonization efforts and managing the complexities of interacting products, particularly in the presence of carbon labeling on online retail platforms. This study develops a featured model and conducts pricing operations and welfare analysis within an online platform context, considering both product complementation and substitution. Under the substitu