Green Multistakeholder Theory *

38 Pages Posted: 24 Jan 2024

See all articles by Briana Chang

Briana Chang

University of Wisconsin - Madison - Department of Finance, Investment and Banking

Harrison G. Hong

Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 31, 2023

Abstract

We present a tractable matching model of firms and green stakeholders, who incur a disutility from their firms' emissions. There are multiple types of stakeholders, such as banks and workers, and each type is required for output. We develop a solution method to characterize the competitive multilateral-matching equilibrium. Productive firms either have all brown or green stakeholders, while less-productive firms have mixed teams. A firm's costly abatement increases with the green stakeholders on its team. There are compensating differentials and rents to skilled brown stakeholders. Due to sorting, green financial institutions generate limited abatement. A counterfactual skills-weighted mandate requiring larger institutions to commit more to green companies maximizes impact.

Keywords: Stakeholders, Boycott, Carbon Emissions, Greenium, Climate Change, Compensating differentials

JEL Classification: G2, G3, H2, H4, Q50

Suggested Citation

Chang, Briana and Hong, Harrison G., Green Multistakeholder Theory * (December 31, 2023). Available at SSRN: https://ssrn.com/abstract=4680626 or http://dx.doi.org/10.2139/ssrn.4680626

Briana Chang

University of Wisconsin - Madison - Department of Finance, Investment and Banking ( email )

975 University Avenue
Madison, WI 53706
United States

Harrison G. Hong (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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