Arbeitspapier

Environmental policy with green consumerism

Is green consumerism beneficial to the environment and the economy? To shed light on this question, we study the political economy of environmental regulations in a model with neutral and green consumers where the latter derive some warm glow from buying a good of higher environmental quality produced by a profit-maximizing monopoly, while the good bought by neutral consumers is provided by a competitive fringe. Consumers unanimously vote for a standard set at a lower than first-best level, or for a tax delivering the first-best environmental protection level. Despite its under-provision of environmental protection, the standard dominates the tax from a welfare perspective due to its higher productive efficiency, i.e., a smaller gap between the environmental qualities of the two goods supplied. In stark contrast, voters unanimously prefer a tax to a standard when the willingness to pay for greener goods is small enough.

Language
Englisch

Bibliographic citation
Series: EconPol Working Paper ; No. 49

Classification
Wirtschaft
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Externalities
Energy: Demand and Supply; Prices
Alternative Energy Sources
Energy: Government Policy
Subject
environmental regulation
corporate social responsibility
green consumerism
product differentiation
tax
standard
green label
political economy

Event
Geistige Schöpfung
(who)
Ambec, Stefan
De Donder, Philippe
Event
Veröffentlichung
(who)
ifo Institute - Leibniz Institute for Economic Research at the University of Munich
(where)
Munich
(when)
2020

Handle
Last update
10.03.2025, 11:41 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Arbeitspapier

Associated

  • Ambec, Stefan
  • De Donder, Philippe
  • ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Time of origin

  • 2020

Other Objects (12)