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Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers

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  • Maria José Gil-Moltó

    ()

  • Dimitrios Varvarigos

    ()

Abstract

We model a market with environmentally conscious consumers and a duopoly in which firms consider the adoption of a clean technology. We show that as pollution increases, consumers shift more resources to the environmental activities, thereby affecting negatively the demand faced by the duopoly. This effect generates incentives for firms to adopt the clean technology even in the absence of emissions taxes. When such taxes are considered, our results indicate that the benefit of adopting the clean technology is initially increasing and then decreasing in the emission tax. The range of values for which the emission tax increases this benefit becomes narrower when the consumers’ environmental awareness is stronger.

Suggested Citation

  • Maria José Gil-Moltó & Dimitrios Varvarigos, 2011. "Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers," Discussion Papers in Economics 11/49, Department of Economics, University of Leicester.
  • Handle: RePEc:lec:leecon:11/49
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Lambertini, Luca & Poyago-Theotoky, Joanna & Tampieri, Alessandro, 2017. "Cournot competition and “green” innovation: An inverted-U relationship," Energy Economics, Elsevier, vol. 68(C), pages 116-123.
    2. repec:spr:envpol:v:20:y:2018:i:2:d:10.1007_s10018-017-0197-2 is not listed on IDEAS
    3. Moner-Colonques, R. & Rubio, S., 2015. "The timing of environmental policy in a duopolistic market," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 0(Number 01).
    4. repec:eee:resene:v:52:y:2018:i:c:p:33-49 is not listed on IDEAS
    5. Jinhuan Tang & Shoufeng Ji & Liwen Jiang, 2016. "The Design of a Sustainable Location-Routing-Inventory Model Considering Consumer Environmental Behavior," Sustainability, MDPI, Open Access Journal, vol. 8(3), pages 1-20, February.
    6. repec:gam:jsusta:v:8:y:2016:i:3:p:211:d:64715 is not listed on IDEAS
    7. repec:spr:annopr:v:255:y:2017:i:1:d:10.1007_s10479-016-2106-7 is not listed on IDEAS
    8. 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

    Environmentally Conscious Consumers; Technology Choice; Environmental Taxation;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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