On Export Rivalry and the Greening of Agriculture — The Role of Eco-labels Arnab K. Basu ∗ Nancy H. Chau † and Ulrike Grote ‡ This version: March 2004 Preliminary version: September 2002 Abstract: Why do some countries establish their own national eco-labeling programs and others do not? In this paper, we provide theoretical arguments and empirical evidence sug- gesting that the answer to this question can shed new light on three questions that have taken center-stage in the trade and environment debate: (i) does trade exacerbate the exploitation of the environment; (ii) are countries competing in export markets engaged in a race to the bottom in environmental performance; and (iii) do market-based environmental instruments benefit the rich and hurt the poor? Keywords: Eco-labeling in Agriculture, Export Rivalry, Strategic Complementarity. ∗ Department of Economics, College of William & Mary, Williamsburg, VA 23187 and Center for Development Research (ZEF), University of Bonn, Bonn 53113, Germany. E-mail: akbasu@wm.edu † Department of Applied Economics and Management, Cornell University, Ithaca NY 14853 and Center for Development Research (ZEF), University of Bonn, Bonn 53113, Germany. Email: hyc3@cornell.edu ‡ Center for Development Research (ZEF), University of Bonn, Walter-Flex-Str. 3, D-53113, Bonn, Germany. E-mail: u.grote@uni-bonn.de