Induced vs. Voluntary Green Production: Which Is Better for Society?

Domenico Buccella and Augustine Abakpa

Politická ekonomie, 2023, vol. 2023, issue 1, 89-103

Abstract: This article studies the environmental and societal impacts of a polluting monopoly when a society strives for a clean environment. Two scenarios are considered: (1) the government levies an environmental tax to induce investment in emission-reducing technology, and (2) the monopolist engages in environmental corporate social responsibility (CSR). It is shown that taxation has a lower environmental impact, but the monopolist undertakes CSR activities only if the abatement technology is efficient. Social welfare is always higher under CSR; therefore, when the technology is not adequately efficient, the government should implement a second-best environmental tax policy to avoid the worst welfare outcome.

Keywords: Green production; abatement; environmental tax; environmental corporate social responsibility (search for similar items in EconPapers)
JEL-codes: H23 L1 M5 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.18267/j.polek.1368

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