This paper analyzes how the interaction between green consumers and responsible firms affects the market equilibrium. The main result is that a higher degree of responsibility of consumers and/or firms may both increase and decrease the total abatement and the social welfare. In general an increment in the degree of CSR of a firm entails an increase of its total clean-up and a reduction of the aggregate abatement of its rival. When the rival firm has a high degree of CSR this second effect is stronger than the first and total abatement falls down. At the same time, when the degree of consciousness of consumers and/or firms is very high, responsible firms overprovide environmental quality: in such case a further increment in the level of social responsibility of a market actor may trigger an increase of firms’ total clean-up but a reduction in social welfare.
Market Equilibrium in the Presence of Green Consumers and Responsible Firms: a Comparative Statics Analysis / Nicola Doni; Giorgio Ricchiuti. - In: RESOURCE AND ENERGY ECONOMICS. - ISSN 0928-7655. - STAMPA. - 35:(2013), pp. 380-395. [10.1016/j.reseneeco.2013.04.003]
Market Equilibrium in the Presence of Green Consumers and Responsible Firms: a Comparative Statics Analysis
DONI, NICOLA;RICCHIUTI, GIORGIO
2013
Abstract
This paper analyzes how the interaction between green consumers and responsible firms affects the market equilibrium. The main result is that a higher degree of responsibility of consumers and/or firms may both increase and decrease the total abatement and the social welfare. In general an increment in the degree of CSR of a firm entails an increase of its total clean-up and a reduction of the aggregate abatement of its rival. When the rival firm has a high degree of CSR this second effect is stronger than the first and total abatement falls down. At the same time, when the degree of consciousness of consumers and/or firms is very high, responsible firms overprovide environmental quality: in such case a further increment in the level of social responsibility of a market actor may trigger an increase of firms’ total clean-up but a reduction in social welfare.File | Dimensione | Formato | |
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