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Conservation: From Voluntary Restraint to a Voluntary Price Premium

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  • Matthew Kotchen

    ()

  • Michael Moore

Abstract

This paper investigates how concern for the environment translates into predictable patterns of consumer behavior. Two types of behavior are considered. First, individuals who care about environmental quality may voluntarily restrain their consumption of goods and services that generate a negative externality. Second, individuals may choose to pay a price premium for goods and services that are more environmentally benign. A theoretical model identifies a symmetry between such voluntary restraint and a voluntary price premium that mirrors the symmetry between environmental policies based on either quantities (quotas) or prices (taxes). We test predictions of the model in an empirical study of household electricity consumption with introduction of a price-premium, green-electricity program. We find evidence of voluntary restraint and its relation to a voluntary price premium. The empirical results are consistent with the theoretical model of voluntary conservation.

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 40 (2008)
Issue (Month): 2 (June)
Pages: 195-215

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Handle: RePEc:kap:enreec:v:40:y:2008:i:2:p:195-215

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: Conservation behavior; Electricity demand; Renewable energy; D1; Q4; Q5;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Derek Jeter's Carbon Footprint
    by Matthew E. Kahn in Environmental and Urban Economics on 2011-02-27 21:12:00
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Cited by:
  1. repec:hhs:slucer:2014_008 is not listed on IDEAS
  2. Matthew J. Kotchen, 2009. "Voluntary Provision of Public Goods for Bads: A Theory of Environmental Offsets," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 119(537), pages 883-899, 04.
  3. Grant Jacobsen & Matthew Kotchen & Greg Clendenning, 2013. "Community-based incentives for environmental protection: the case of green electricity," Journal of Regulatory Economics, Springer, vol. 44(1), pages 30-52, August.
  4. Marco Salvi & Juerg Syz, 2011. "What drives “green housing” construction? Evidence from Switzerland," Journal of Financial Economic Policy, Emerald Group Publishing, Emerald Group Publishing, vol. 3(1), pages 86-102, February.
  5. Jacobsen, Grant D. & Kotchen, Matthew J. & Vandenbergh, Michael P., 2012. "The behavioral response to voluntary provision of an environmental public good: Evidence from residential electricity demand," European Economic Review, Elsevier, vol. 56(5), pages 946-960.
  6. Tiefenbeck, Verena & Staake, Thorsten & Roth, Kurt & Sachs, Olga, 2013. "For better or for worse? Empirical evidence of moral licensing in a behavioral energy conservation campaign," Energy Policy, Elsevier, vol. 57(C), pages 160-171.
  7. Dastrup, Samuel R. & Graff Zivin, Joshua & Costa, Dora L. & Kahn, Matthew E., 2012. "Understanding the Solar Home price premium: Electricity generation and “Green” social status," European Economic Review, Elsevier, vol. 56(5), pages 961-973.
  8. Kiran Krishnamurthy, Chandra & Kriström, Bengt, 2013. "Determinants of the price-premium for Green Energy: Evidence from an OECD cross-section," CERE Working Papers 2013:7, CERE - the Center for Environmental and Resource Economics, revised 30 Jun 2014.
  9. Jamilah Ahmad & Imran Ali & Georgiana Florentina Grigore & Alin Stancu, 2012. "Studying Consumers’ Ecological Consciousness – A Comparative Analysis of Romania, Malaysia and Pakistan," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 14(31), pages 84-98, February.
  10. Karine Constant & Marion Davin, 2014. "Environmental Policy and Growth in a Model with Endogenous Environmental Awareness," Working Papers halshs-00964540, HAL.
  11. Julia Blasch & Mehdi Farsi, 2012. "Retail demand for voluntary carbon offsets - A choice experiment among Swiss consumers," IED Working paper, IED Institute for Environmental Decisions, ETH Zurich 12-18, IED Institute for Environmental Decisions, ETH Zurich.
  12. Kiran Krishnamurthy, Chandra & Kriström, Bengt, 2013. "How large is the Owner-Renter Divide? Evidence from an OECD cross-section," CERE Working Papers 2013:8, CERE - the Center for Environmental and Resource Economics.
  13. repec:hhs:slucer:2014_007 is not listed on IDEAS
  14. Felix Ebeling, 2013. "Non-binding Defaults and Voluntary Contributions to a Public Good - Clean Evidence from a Natural Field Experiment," Working Paper Series in Economics, University of Cologne, Department of Economics 66, University of Cologne, Department of Economics.
  15. Gary D. Libecap, 2014. "Addressing Global Environmental Externalities: Transaction Costs Considerations," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 424-79, June.
  16. Matthew J. Holian & Matthew E. Kahn, 2014. "Household Demand for Low Carbon Public Policies: Evidence from California," NBER Working Papers 19965, National Bureau of Economic Research, Inc.

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