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Market equilibrium in the presence of green consumers and responsible firms: A comparative statics analysis

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  • Doni, Nicola
  • Ricchiuti, Giorgio

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.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 35 (2013)
Issue (Month): 3 ()
Pages: 380-395

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Handle: RePEc:eee:resene:v:35:y:2013:i:3:p:380-395

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Web page: http://www.elsevier.com/locate/inca/505569

Related research

Keywords: Green consumers; Corporate social responsibility; Vertical differentiation;

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References

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Cited by:
  1. Nicola Doni & Giorgio Ricchiuti, 2011. "Market Equilibrium in the Presence of Green Consumers and Responsible Firms: A Comparative Statics Analysis," Working Papers 2011.33, Fondazione Eni Enrico Mattei.

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