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Inducing Green Behavior in a Manufacturer

Global Journal of Business Research, Vol. 4, No. 2, pp. 27-38, 2010

12 Pages Posted: 5 Jul 2010  

Andrew Manikas

University of Wisconsin - Oshkosh

Michael Godfrey

University of Wisconsin - Oshkosh

Date Written: 2010

Abstract

The triple bottom line (economic, environmental, and social performance) is an important approach to long-term sustainability of a manufacturing company. However, a manufacturer will always feel pressure to focus on the economic bottom line and to give at least equal importance to the second and third bottom lines (environmental and social performance). As environmental issues become more important to citizens, they demand enhanced environmental performance from companies by exerting pressure on public policy makers to enact regulations, taxes, permits, and penalties that motivate companies to improve their environmental performance. We present a model that could be used by governmental policy makers to predict the effects from reducing the number of emissions permits and increasing the penalties for exceeding allowable emission limits. Our model is for a product that has a limited selling season. We propose a newsvendor model to estimate a manufacturing company’s optimal production quantity based on maximization of expected profits given the cost of emission permits and penalties for exceeding emission limits allowed by the permits. In addition, the newsvendor model provides insights to policy makers on the effects of adjusting the regulatory levers of emission permits and penalties.

Keywords: Triple Bottom Line, Manufacturing, Sustainability, Green

JEL Classification: M11, R38

Suggested Citation

Manikas, Andrew and Godfrey, Michael, Inducing Green Behavior in a Manufacturer (2010). Global Journal of Business Research, Vol. 4, No. 2, pp. 27-38, 2010. Available at SSRN: https://ssrn.com/abstract=1633599

Andrew Manikas (Contact Author)

University of Wisconsin - Oshkosh ( email )

Michael Godfrey

University of Wisconsin - Oshkosh ( email )

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