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The Adoption Of Cleaner Household Technologies: When Is Backfire Welfare-Improving?

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Abstract

I examine a setting in which households with “green preferences” choose between two available technologies on the basis of their costs, and on the basis of their associated emissions. The green preferences give rise to a reciprocal externality among the households, the correction of which requires policy intervention. In the absence of corrective policy, the adoption of a cleaner technology can be welfare-improving even when it induces an increase in emissions (backfire). A reduction in emissions is neither necessary nor sufficient for the equilibrium adoption of a cleaner technology to be welfare-improving. Mandated adoption of a cleaner technology – when households have otherwise chosen not to adopt it – is never welfare-improving if it induces backfire.

Suggested Citation

  • Peter Kennedy, 2022. "The Adoption Of Cleaner Household Technologies: When Is Backfire Welfare-Improving?," Department Discussion Papers 2011, Department of Economics, University of Victoria.
  • Handle: RePEc:vic:vicddp:2011
    Note: ISSN 1914-2838 JEL Classifications: Q52, Q55, Q58
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    Keywords

    backfire; clean technology; energy-efficiency; greenhouse gases; rebound;
    All these keywords.

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