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Market Equilibrium in the Presence of Green Consumers and Responsible Firms: A Comparative Statics Analysis

Author

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  • Nicola Doni

    (Dipartimento Scienze Economiche, Università di Firenze)

  • Giorgio Ricchiuti

    (Dipartimento Scienze Economiche, Università di Firenze)

Abstract

This paper analyzes how the interaction between green consumers and responsible firms affects the market equilibrium. The main result is that a higher responsibility by both producers and consumers can have different impacts on the efficiency of the firms’ abatement activity, depending on the nature of the cleaning costs. When the abatement costs are fixed, the efficiency of the clean-up effort is always increasing in their degree of responsibility. On the other hand, when the abatement costs are variable, a higher level of responsibility may reduce social welfare. Finally, the first best allocation is never reached, even in the presence of the highest credible level of responsibility of both consumers and producers.

Suggested Citation

  • Nicola Doni & Giorgio Ricchiuti, 2011. "Market Equilibrium in the Presence of Green Consumers and Responsible Firms: A Comparative Statics Analysis," Working Papers 2011.33, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2011.33
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    Cited by:

    1. repec:gam:jgames:v:8:y:2017:i:3:p:39-:d:111882 is not listed on IDEAS
    2. repec:kap:regeco:v:52:y:2017:i:3:d:10.1007_s11149-017-9339-5 is not listed on IDEAS
    3. Prudence Dato, 2017. "Investment in Energy Efficiency, Adoption of Renewable Energy and Household Behaviour: Evidence from OECD countries," Working Papers 2017.05, FAERE - French Association of Environmental and Resource Economists.
    4. Doni, Nicola & Ricchiuti, Giorgio, 2013. "Market equilibrium in the presence of green consumers and responsible firms: A comparative statics analysis," Resource and Energy Economics, Elsevier, vol. 35(3), pages 380-395.
    5. Luca Lambertini & Giuseppe Pignataro & Alessandro Tampieri, 2015. "The effect of Environmental Quality Misperception on Investments and Regulation," CREA Discussion Paper Series 15-01, Center for Research in Economic Analysis, University of Luxembourg.
    6. L. Lambertini & G. Pignataro & A. Tampieri, 2014. "Green Consumers, Greenwashing and the Misperception of Environmental Quality," Working Papers wp958, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Wenjun Sun & Naoto Jinji, 2014. "The Effects of Emission Taxes on Pollution through the Diffusion of Clean Technology:The Presence of Green Consumers," Discussion papers e-14-014, Graduate School of Economics Project Center, Kyoto University.

    More about this item

    Keywords

    Green Consumers; Corporate Social Responsibility; Vertical Differentiation;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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