Abstract
This paper studies the impact of some frequently-used environmental policies in a duopolistic market where purchasers are willing to pay more for less polluting goods. When consumers differ in their environmental awareness, a cleaner and a dirtier variant coexist in equilibrium. The higher the average willingness-to-pay for the good, the lower are variants' unit emissions but the higher are industrial aggregate effluents. A maximum unit emission standard reduces unit emissions of both variants, but boosts firms' sales and consequently increases industrial aggregate emissions. As a result, social welfare may be reduced. We also explore the effects of technological subsidies and product charges, including differentiation of charges.
| Original language | English |
|---|---|
| Pages (from-to) | 419-447 |
| Number of pages | 29 |
| Journal | Environmental and Resource Economics |
| Volume | 22 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2002 |
Keywords
- Environmentalists
- Environmentally differentiated duopoly
- Green consumption
- Green market
- Product charges
- Subsidies
- Unit emission standards
