On the Corporate Use of Green Bonds

Journal of Economics and Management Strategy, Forthcoming

Posted: 17 Oct 2019

Date Written: September 25, 2019

Abstract

When do wholesalers issue green bonds to finance their socially responsible activities instead of charging a premium for the products they produce? We show that in less competitive retail markets when retailers can "skim" more of the premium that end consumers pay for socially responsible products, green bonds provide additional funds to help cover the cost of a wholesaler's socially responsible activities. Similar incentives arise if the wholesaler's input is a small component of the end consumers' product, or if it is difficult for end consumers to identify the wholesaler's socially responsible activities.

Keywords: Green Bonds, Corporate Social Responsibility, Intermediate Good Producer, Retail Competition

JEL Classification: D21, G30, M14, Q50

Suggested Citation

Bagnoli, Mark E. and Watts, Susan G., On the Corporate Use of Green Bonds (September 25, 2019). Journal of Economics and Management Strategy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3466343

Mark E. Bagnoli (Contact Author)

Purdue University ( email )

Department of Accounting
West Lafayette, IN 47907-1310
United States
765-494-4484 (Phone)
765-496-1778 (Fax)

Susan G. Watts

Purdue University ( email )

Department of Accounting
West Lafayette, IN 47907-1310
United States
765-494-4504 (Phone)
765-496-1778 (Fax)

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