Fat-tail Climate Risks, Mechanism design, and Reputation
AbstractThis paper investigates the interaction between consumers and producers in designing incentive mechanism for climate protection. Firms have material interests in building a moral reputation for those consumers who prefer buying from socially responsible firms. We examine optimal monetary transfer by addressing crowding out effect due to reputation. We find green reputation leads to overprotection and brown firms buy reputation if consumers have strong preference on green products. When consumers care less about firms’ reputation, firms do not have any incentive to buy reputation.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 124920.
Date of creation: 04 Jun 2012
Date of revision:
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More information through EDIRC
Asymmetric Information; Climate change; Crowding out; Mechanism Design; Reputation.; Consumer/Household Economics; D02; D03; Q15; Q34; Q57;
Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
- Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
- Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-CTA-2012-06-25 (Contract Theory & Applications)
- NEP-ENE-2012-06-25 (Energy Economics)
- NEP-ENV-2012-06-25 (Environmental Economics)
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