Is Environmentalism the Right Strategy to Decarbonize the World?
48 Pages Posted: 28 Dec 2020
There are 2 versions of this paper
Is Environmentalism the Right Strategy to Decarbonize the World?
Is Environmentalism the Right Strategy to Decarbonize the World?
Date Written: December 23, 2020
Abstract
We study how the supply of environmentalism, which is defined by psychic benefits (costs) associated with the purchase of high-environmental (low-environmental) qualities, affects the way firms choose their products and the ensuing consequences for the global level of pollution. Contrary to general belief, a high supply of environmentalism does not give rise to a better environmental outcome because it endows firms with more market power which they use to maximize profits. By contrast, standard policy instruments such as a minimum quality standard or the use of greener technologies leads to a better ecological footprint.
Keywords: Environmentalism, Psychic Costs and Benefits, Vertical Product Differentiation, Environmental Policy
JEL Classification: D11, L13, Q50
Suggested Citation: Suggested Citation