IDEAS home Printed from https://ideas.repec.org/a/eee/resene/v30y2008i3p345-368.html
   My bibliography  Save this article

Choice and design of regulatory instruments in the presence of green consumers

Author

Listed:
  • Bansal, Sangeeta

Abstract

Using a vertically differentiated product model, this paper examines welfare implications of various government policies in a situation where consumers are environmentally discerning. It studies ad valorem taxes/subsidies and emission taxes. The optimal policy depends on the magnitude of damage parameter associated with environmental externality. For a given distribution of tastes and preferences, as the damage parameter increases from a low to a high value, the optimal policy shifts from an ad valorem tax to an ad valorem subsidy. It also shows that for a sufficiently low damage parameter, an ad valorem tax dominates an emission tax.

Suggested Citation

  • Bansal, Sangeeta, 2008. "Choice and design of regulatory instruments in the presence of green consumers," Resource and Energy Economics, Elsevier, vol. 30(3), pages 345-368, August.
    • Handle: RePEc:eee:resene:v:30:y:2008:i:3:p:345-368
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0928-7655(08)00002-X
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Stefan Lutz & Thomas P. Lyon & John W. Maxwell, 2000. "Quality Leadership when Regulatory Standards are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 331-348, September.
    2. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January.
    3. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-1041, December.
    4. José Moraga-González & Noemi Padrón-Fumero, 2002. "Environmental Policy in a Green Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 419-447, July.
    5. Cremer, Helmuth & Thisse, Jacques-Francois, 1999. "On the taxation of polluting products in a differentiated industry," European Economic Review, Elsevier, vol. 43(3), pages 575-594, March.
    6. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(1), pages 3-13.
    7. Cremer, Helmuth & Thisse, Jacques-Francois, 1994. "Commodity Taxation in a Differentiated Oligopoly," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(3), pages 613-633, August.
    8. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    9. C. Lombardini-Riipinen, 2005. "Optimal Tax Policy under Environmental Quality Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(3), pages 317-336, November.
    10. Khanna, Madhu & Damon, Lisa A., 1999. "EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 1-25, January.
    11. Arora, Seema & Gangopadhyay, Shubhashis, 1995. "Toward a theoretical model of voluntary overcompliance," Journal of Economic Behavior & Organization, Elsevier, vol. 28(3), pages 289-309, December.
    12. Itoh, Motoshige, 1983. "Monopoly, product differentiation and economic welfare," Journal of Economic Theory, Elsevier, vol. 31(1), pages 88-104, October.
    13. Tom Tietenberg, 1998. "Disclosure Strategies for Pollution Control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 11(3), pages 587-602, April.
    14. Uri Ronnen, 1991. "Minimum Quality Standards, Fixed Costs, and Competition," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 490-504, Winter.
    15. Bansal, Sangeeta & Gangopadhyay, Shubhashis, 2003. "Tax/subsidy policies in the presence of environmentally aware consumers," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 333-355, March.
    16. Lutz, Stefan & Lyon, Thomas P & Maxwell, John W, 2000. "Quality Leadership When Regulatory Standards Are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 331-348, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brzeskot, Magdalena & Haupt, Alexander, 2013. "Environmental policy and the energy efficiency of vertically differentiated consumer products," Energy Economics, Elsevier, vol. 36(C), pages 444-453.
    2. Dorothée Brécard, 2011. "Environmental Tax in a Green Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(3), pages 387-403, July.
    3. L. Lambertini & A. Tampieri, 2012. "On the Emergence of Overcompliance with Endogenous Environmental Standards and Patronising Consumers," Working Papers wp847, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Bansal, Sangeeta & Gangopadhyay, Shubhashis, 2003. "Tax/subsidy policies in the presence of environmentally aware consumers," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 333-355, March.
    5. Lambertini, Luca & Tampieri, Alessandro, 2012. "Do minimum quality standards bite in polluting industries?," Research in Economics, Elsevier, vol. 66(2), pages 184-194.
    6. S Lutz, 2005. "Can a Tariff on Foreign Competition Harm the Domestic Industry?," Economics Discussion Paper Series 0510, Economics, The University of Manchester.
    7. Alexander Haupt & Magdalena Stadejek, 2010. "The Choice of Environmental Policy Instruments: Energy Efficiency and Redistribution," CESifo Working Paper Series 2986, CESifo.
    8. Olivier Bonroy, 2006. "Le standard de qualité minimale est-il un instrument socialement optimal ?. Une revue de littérature," Revue économique, Presses de Sciences-Po, vol. 57(1), pages 35-53.
    9. Yoshinori Wada, 2019. "Discriminatory tax and subsidy on environmental behaviors," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 21(1), pages 25-36, January.
    10. Keith Brouhle & Madhu Khanna, 2007. "Information And The Provision Of Quality Differentiated Products," Economic Inquiry, Western Economic Association International, vol. 45(2), pages 377-394, April.
    11. Paolo G. Garella, 2021. "The effects of taxes and subsidies on environmental qualities in a differentiated duopoly," Letters in Spatial and Resource Sciences, Springer, vol. 14(2), pages 197-209, August.
    12. Klaus CONRAD, 2005. "Price Competition and Product Differentiation when Goods have Network Effects," Industrial Organization 0502002, University Library of Munich, Germany.
    13. Vasileiou, Efi & Georgantzís, Nikolaos, 2015. "An experiment on energy-saving competition with socially responsible consumers: Opening the black box," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 1-10.
    14. Ahmed, Rasha & Segerson, Kathleen, 2011. "Collective voluntary agreements to eliminate polluting products," Resource and Energy Economics, Elsevier, vol. 33(3), pages 572-588, September.
    15. Dorothée Brécard, 2013. "Environmental Quality Competition and Taxation in the Presence of Green Network Effect Among Consumers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 1-19, January.
    16. Conrad, Klaus, 2004. "Price Competition and Product Differentiation when Goods have Network Effects," Discussion Papers 612, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    17. Boccard Nicolas & Wauthy Xavier Y., 2010. "Ensuring Quality Provision through Capacity Regulation under Price Competition," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 10(1), pages 1-27, October.
    18. Doni, Nicola & Ricchiuti, Giorgio, 2013. "Market equilibrium in the presence of green consumers and responsible firms: A comparative statics analysis," Resource and Energy Economics, Elsevier, vol. 35(3), pages 380-395.
    19. Lutz, Stefan H., 2002. "The Effects of Quotas on Vertical Intra-Industry Trade," ZEW Discussion Papers 02-61, ZEW - Leibniz Centre for European Economic Research.
    20. Ibrahima Barry & Olivier Bonroy & Paolo G. Garella, 2017. "Eco-labelling by a for-profit certifier: Countervailing power and its consequences," Canadian Journal of Economics, Canadian Economics Association, vol. 50(4), pages 1037-1062, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:resene:v:30:y:2008:i:3:p:345-368. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505569 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.