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Induced vs. Voluntary Green Production: Which Is Better for Society?

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Listed:
  • Domenico Buccella
  • Augustine Abakpa

Abstract

This article studies the environmental and societal impacts of a polluting monopoly when a society strives for a clean environment. Two scenarios are considered: (1) the government levies an environmental tax to induce investment in emission-reducing technology, and (2) the monopolist engages in environmental corporate social responsibility (CSR). It is shown that taxation has a lower environmental impact, but the monopolist undertakes CSR activities only if the abatement technology is efficient. Social welfare is always higher under CSR; therefore, when the technology is not adequately efficient, the government should implement a second-best environmental tax policy to avoid the worst welfare outcome.

Suggested Citation

  • Domenico Buccella & Augustine Abakpa, 2023. "Induced vs. Voluntary Green Production: Which Is Better for Society?," Politická ekonomie, Prague University of Economics and Business, vol. 2023(1), pages 89-103.
    • Handle: RePEc:prg:jnlpol:v:2023:y:2023:i:1:id:1368:p:89-103
    DOI: 10.18267/j.polek.1368
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    References listed on IDEAS

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    1. Ministry of Finance, Government of India,, 2016. "Economic Survey 2015-16," OUP Catalogue, Oxford University Press, number 9780199469284.
    2. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
    3. Elias Asproudis & Maria Gil-Moltó, 2015. "Green Trade Unions: Structure, Wages and Environmental Technology," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(2), pages 165-189, February.
    4. Fukuda, Katsufumi & Ouchida, Yasunori, 2020. "Corporate social responsibility (CSR) and the environment: Does CSR increase emissions?," Energy Economics, Elsevier, vol. 92(C).
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    More about this item

    Keywords

    Green production; abatement; environmental tax; environmental corporate social responsibility;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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