Green Goodwill and Effectiveness of Carbon Abatement Policies: Static and Dynamic Perspectives
47 Pages Posted: 4 Feb 2025
Date Written: December 20, 2024
Abstract
This study investigates the effectiveness of carbon abatement policies in a Cournot duopoly framework, incorporating static and dynamic analysis. We evaluate four policy interventions-enhancing consumer green awareness, promoting corporate environmental responsibility, reducing carbon abatement costs, and increasing carbon tax rates-and their effects on firms' environmental, economic, and social performance. A static model reveals equilibrium outcomes driven by consumer preferences for firms' green goodwill, while a dynamic extension, incorporating bounded rationality, explores market stability. Our findings underscore the importance of balancing green innovation incentives with mechanisms to maintain stability, offering insights for effective and sustainable policy design in competitive markets.
Keywords: Green Goodwill, Carbon Emission Abatement, Consumer Green Awareness, Bounded Rationality, Market Stability
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