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Environmental Degradation and the Limits to LOV

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  • Chen, Yu-Fu
  • Molana, Hassan
  • Montagna, Catia

Abstract

We show how consumers’ environmental concerns may limit ‘love of variety’ (LOV) and be reflected in consumers decisions. We investigate how the impact of environmental degradation on LOV influences demand and optimal product variety, and how a pollution tax on firms might be used to improve upon the market outcome and increase welfare.

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File URL: http://repo.sire.ac.uk/handle/10943/162
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Bibliographic Info

Paper provided by Scottish Institute for Research in Economics (SIRE) in its series SIRE Discussion Papers with number 2010-30.

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Date of creation: 2010
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Handle: RePEc:edn:sirdps:162

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Keywords: Environmental degradation; love-of-variety; environmental policy;

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  1. Molana, Hassan & Montagna, Catia, 2000. "Market structure, cost asymmetries, and fiscal policy effectiveness," Economics Letters, Elsevier, vol. 68(1), pages 101-107, July.
  2. Benassy, Jean-Pascal, 1991. "Monopolistic competition," Handbook of Mathematical Economics, in: W. Hildenbrand & H. Sonnenschein (ed.), Handbook of Mathematical Economics, edition 1, volume 4, chapter 37, pages 1997-2045 Elsevier.
  3. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  5. Sajal Lahiri & Yoshiyasu Ono, 2007. "Relative Emission Standard versus Tax under Oligopoly: The Role of Free Entry," Journal of Economics, Springer, vol. 91(2), pages 107-128, June.
  6. Catia Montagna, 1998. "Efficiency Gaps, Love of Variety and International Trade," Dundee Discussion Papers in Economics 090, Economic Studies, University of Dundee.
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