Please use this identifier to cite or link to this item: http://hdl.handle.net/10739/3118
Title: Green consumerism and pollution control
Authors: Chander, Parkash
Muthukrishnan, S.
Keywords: Environmentally aware/green consumers
Environmental quality
Collective action
Pollution
Public good
Vertically differentiated duopoly
Issue Date: Jun-2015
Publisher: Journal of Economic Behavior & Organization
Citation: Chander, P., & Muthukrishnan, S. (2015). Green consumerism and pollution control. Journal of Economic Behavior & Organization, 114, 27–35.
Abstract: In this paper, we show that collective action by environmentally aware/green consumers, who derive benefits from consuming environmentally cleaner products, can reduce pollution and improve social welfare in the same manner as pollution taxes or subsidies for reducing pollution can. We construct a model with two competing firms each producing a good of different environmental quality and two types of consumers with high and low preferences for environmental quality and characterize a benchmark equilibrium in which each consumer acts individually and disregards that his decision to buy a good may affect the level of pollution. We then show that, compared to the benchmark equilibrium, collective action by consumers with high preference who take into account the impact of their combined decision to buy a good on pollution will result in an equilibrium with not only lower pollution and higher social welfare, but also higher prices and profits for the firms.
URI: http://hdl.handle.net/10739/3118
Appears in Collections:JGU Research Publications

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