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Incentives, Green Preferences, and Private Provision of Impure Public Goods

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  • Wichman, Casey J.

    (Resources for the Future)

Abstract

Pro-environmental preferences are being used increasingly as environmental policy tools. In this paper, I consider the role of heterogeneous green preferences for private provision of environmental goods that have both private and public characteristics. Under diff erent assumptions of information available to a regulator, I characterize equilibrium properties of several mechanisms. I find incentive-compatible Nash equilibria that provide socially optimal public goods provision when the regulator can enforce individual consumption contracts, as well as when reported consumption contracts are supplemented with group penalties. The role of budget balancing is recast as a policy intervention for correcting environmental market failures. Throughout the paper, I ground the exposition with examples of consumer behavior in the context of green electricity programs and goal setting for energy conservation.

Suggested Citation

  • Wichman, Casey J., 2016. "Incentives, Green Preferences, and Private Provision of Impure Public Goods," RFF Working Paper Series dp-16-08, Resources for the Future.
  • Handle: RePEc:rff:dpaper:dp-16-08
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    Cited by:

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    3. Andreas Niedermayr & Lena Schaller & Petr Mariel & Pia Kieninger & Jochen Kantelhardt, 2018. "Heterogeneous Preferences for Public Goods Provided by Agriculture in a Region of Intensive Agricultural Production: The Case of the Marchfeld," Sustainability, MDPI, vol. 10(6), pages 1-18, June.
    4. Mutascu, Mihai & Horky, Florian & Strango, Cristina, 2023. "Good or bad? Digitalisation and green preferences," Energy Economics, Elsevier, vol. 121(C).
    5. Ho, Chinh Q., 2022. "Can MaaS change users’ travel behaviour to deliver commercial and societal outcomes?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 165(C), pages 76-97.
    6. Gangqiang Yang & Yongyu Xue & Yuxi Ma, 2019. "Social Organization Participation, Government Governance and the Equalization of Basic Public Services: Evidence from China," IJERPH, MDPI, vol. 16(16), pages 1-20, August.
    7. Montoya-Villalobos, Maria J., 2023. "Green consumption: The role of confidence and pessimism," Ecological Economics, Elsevier, vol. 205(C).
    8. James Wesley Burnett & Christopher Mothorpe, 2018. "An Economic Assessment of the Southern Atlantic Coastal Region’s Stormwater Management Practices," Water Economics and Policy (WEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(04), pages 1-38, October.
    9. Maria José Montoya Villalobos, 2021. "Green consumption: The impact of trust and pessimism," EconomiX Working Papers 2021-9, University of Paris Nanterre, EconomiX.
    10. Xiaoyan Wang & Weiwei Zhang, 2022. "Taxes Versus Tradable Permits Considering Public Environmental Awareness," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 293-315, July.
    11. Jiang, Bixia & Bai, Xu & You, Weijia & Fan, Kun, 2021. "Where and how to launch your forestry crowdfunding campaign? Evidence from China," Forest Policy and Economics, Elsevier, vol. 123(C).

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    More about this item

    Keywords

    Private provision of public goods; impure public goods; green markets; incentives; preference revelation; environmental regulation; mechanism design;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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