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Public Goods Provision in the Presence of Heterogeneous Green Preferences

Author

Listed:
  • Mark Jacobsen
  • Jacob LaRiviere
  • Michael Price

Abstract

We develop a model of the private provision of public goods in a world where agents face convex costs of provision. Consonant with prior empirical evidence, we introduce preference heterogeneity by allowing a subset of agents to exhibit pro-social behavior that reflects "green" preferences. We use the model to compare different policies to promote private provision of public goods such as environmental quality or energy conservation. Counter to the standard result, we find that technology standards are frequently preferred to price-based instruments. Extending the model to allow for both benefit and cost heterogeneity, we find that policy choice depends on the correlation between the two forms of heterogeneity.

Suggested Citation

  • Mark Jacobsen & Jacob LaRiviere & Michael Price, 2014. "Public Goods Provision in the Presence of Heterogeneous Green Preferences," NBER Working Papers 20266, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:20266
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    File URL: http://www.nber.org/papers/w20266.pdf
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    References listed on IDEAS

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    1. Becker, Gary S, 1974. "A Theory of Social Interactions," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1063-1093, Nov.-Dec..
    2. Dolan, Paul & Metcalfe, Robert, 2013. "Neighbors, knowledge, and nuggets: two natural field experiments on the role of incentives on energy conservation," LSE Research Online Documents on Economics 51563, London School of Economics and Political Science, LSE Library.
    3. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel, 2009. "Greenhouse Gas Reductions under Low Carbon Fuel Standards?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 106-146, February.
    4. Dora L. Costa & Matthew E. Kahn, 2013. "Energy Conservation “Nudges” And Environmentalist Ideology: Evidence From A Randomized Residential Electricity Field Experiment," Journal of the European Economic Association, European Economic Association, vol. 11(3), pages 680-702, June.
    5. Paul J. Ferraro & Michael K. Price, 2013. "Using Nonpecuniary Strategies to Influence Behavior: Evidence from a Large-Scale Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 64-73, March.
    6. Ian W. H. Parry & Margaret Walls & Winston Harrington, 2007. "Automobile Externalities and Policies," Journal of Economic Literature, American Economic Association, vol. 45(2), pages 373-399, June.
    7. Brandts, Jordi & Schram, Arthur, 2001. "Cooperation and noise in public goods experiments: applying the contribution function approach," Journal of Public Economics, Elsevier, vol. 79(2), pages 399-427, February.
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    Cited by:

    1. Michael K. Price, 2014. "Using field experiments to address environmental externalities and resource scarcity: major lessons learned and new directions for future research," Oxford Review of Economic Policy, Oxford University Press, vol. 30(4), pages 621-638.
    2. Yatang Lin, 2016. "Where Does the Wind Blow? Green Preferences and Spatial Misallocation in Renewable Energy Sector," CEP Discussion Papers dp1424, Centre for Economic Performance, LSE.

    More about this item

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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