Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers

Maria José Gil-Moltó () and Dimitrios Varvarigos ()
Authors registered in the RePEc Author Service: Maria Jose Gil Molto

No 11/49, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: We model a market with environmentally conscious consumers and a duopoly in which firms consider the adoption of a clean technology. We show that as pollution increases, consumers shift more resources to the environmental activities, thereby affecting negatively the demand faced by the duopoly. This effect generates incentives for firms to adopt the clean technology even in the absence of emissions taxes. When such taxes are considered, our results indicate that the benefit of adopting the clean technology is initially increasing and then decreasing in the emission tax. The range of values for which the emission tax increases this benefit becomes narrower when the consumers’ environmental awareness is stronger.

Keywords: Environmentally Conscious Consumers; Technology Choice; Environmental Taxation (search for similar items in EconPapers)
JEL-codes: L13 Q55 Q58 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-ene, nep-env, nep-mkt and nep-res
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Journal Article: Emission taxes and the adoption of cleaner technologies: The case of environmentally conscious consumers (2013)
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