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Environmental Policy in a Green Market

  • José Moraga-González


  • Noemi Padrón-Fumero


This paper studies the impact of some frequently-used environmental policies in a duopolistic market where purchasers are willing to pay more for less polluting goods. When consumers differ in their environmental awareness, a cleaner and a dirtier variant coexist in equilibrium. The higher the average willingness-to-pay for the good, the lower are variants' unit emissions but the higher are industrial aggregate effluents. A maximum unit emission standard reduces unit emissions of both variants, but boosts firms' sales and consequently increases industrial aggregate emissions. As a result, social welfare may be reduced. We also explore the effects of technological subsidies and product charges, including differentiation of charges. Copyright Kluwer Academic Publishers 2002

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

Volume (Year): 22 (2002)
Issue (Month): 3 (July)
Pages: 419-447

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Handle: RePEc:kap:enreec:v:22:y:2002:i:3:p:419-447
DOI: 10.1023/A:1016060928997
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  1. Crampes,C. & Ibanez,L., 1996. "The Economics of Green Labels," Papers 96.439, Toulouse - GREMAQ.
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