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Green consumerism and collective action

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  • CHANDER, Parkash
  • MUTHUKRISHNAN, Subhashini

Abstract

We analyze the effect of collective action by green/environmentally aware consumers on ambient environmental quality and market equilibrium. We consider a model with two types of consumers who differ in their willingness-to-pay for a good available in two different environmental qualities, and two competing firms: one selling the good of high environmental quality and the other of low environmental quality. We show that collective action by green consumers reduces competition and leads to higher prices for the good of both qualities. Though it improves the ambient environmental quality, it may reduce the welfare of both types of consumers.

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File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2007_58.pdf
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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2007058.

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Date of creation: 01 Aug 2007
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Handle: RePEc:cor:louvco:2007058

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Related research

Keywords: green consumers; collective action; environmental quality; differentiated duopoly; firm profitability;

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