Fat-tail Climate Risks, Mechanism design, and Reputation
This 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.
|Date of creation:||04 Jun 2012|
|Date of revision:|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bowles, Samuel & Hwang, Sung-Ha, 2008.
"Social preferences and public economics: Mechanism design when social preferences depend on incentives,"
Journal of Public Economics,
Elsevier, vol. 92(8-9), pages 1811-1820, August.
- Samuel Bowles & Sung Ha Hwang, 2008. "Social Preferences and Public Economics: Mechanism design when social preferences depend on incentives," UMASS Amherst Economics Working Papers 2008-06, University of Massachusetts Amherst, Department of Economics.
- Samuel Bowles & Sung-Ha Hwang, 2008. "Social Preferences and Public Economics: Mechanism Design when Social Preferences Depend on Incentives," Department of Economics University of Siena 530, Department of Economics, University of Siena.
- Carl Shapiro, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, Oxford University Press, vol. 98(4), pages 659-679.
- Weitzman, Martin L., 2012.
"GHG Targets as Insurance Against Catastrophic Climate Damages,"
11315435, Harvard University Department of Economics.
- Martin L. Weitzman, 2012. "GHG Targets as Insurance Against Catastrophic Climate Damages," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 14(2), pages 221-244, 03.
- Martin L. Weitzman, 2010. "GHG Targets as Insurance Against Catastrophic Climate Damages," NBER Working Papers 16136, National Bureau of Economic Research, Inc.
- Laffont, Jean-Jacques, 1995. "Regulation, moral hazard and insurance of environmental risks," Journal of Public Economics, Elsevier, vol. 58(3), pages 319-336, November.
- Dan Ariely & Anat Bracha & Stephan Meier, 2007.
"Doing good or doing well? Image motivation and monetary incentives in behaving prosocially,"
07-9, Federal Reserve Bank of Boston.
- Dan Ariely & Anat Bracha & Stephan Meier, 2009. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," American Economic Review, American Economic Association, vol. 99(1), pages 544-55, March.
- Ariely, Dan & Bracha, Anat & Meier, Stephan, 2007. "Doing Good or Doing Well? Image Motivation and Monetary Incentives in Behaving Prosocially," IZA Discussion Papers 2968, Institute for the Study of Labor (IZA).
- Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
- Milgrom, Paul & Roberts, John, 1986.
"Price and Advertising Signals of Product Quality,"
Journal of Political Economy,
University of Chicago Press, vol. 94(4), pages 796-821, August.
- Baliga, Sandeep & Maskin, Eric, 2003.
"Mechanism design for the environment,"
Handbook of Environmental Economics,
in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 7, pages 305-324
- Sandeep Baliga & Eric Maskin, 2002. "Mechanism Design for the Environment," Economics Working Papers 0024, Institute for Advanced Study, School of Social Science.
- Sandeep Baliga & Eric Maskin, 2003. "Mechanism Design for the Environment," Levine's Working Paper Archive 506439000000000341, David K. Levine.
- Weitzman, Martin L., 2009.
"On Modeling and Interpreting the Economics of Catastrophic Climate Change,"
3693423, Harvard University Department of Economics.
- Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
- M.A. Nowak & K. Sigmund, 1998. "Evolution of Indirect Reciprocity by Image Scoring/ The Dynamics of Indirect Reciprocity," Working Papers ir98040, International Institute for Applied Systems Analysis.
- Klein, Benjamin & Leffler, Keith B, 1981. "The Role of Market Forces in Assuring Contractual Performance," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 615-41, August.
- Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea12:124920. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.