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Green Consumers, Greenwashing and the Misperception of Environmental Quality

Luca Lambertini (), Giuseppe Pignataro and Alessandro Tampieri

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: In this paper we analyse a setup where consumers are heterogeneous in the perception of environmental quality. The equilibrium is verified in a setting with horizontal and vertical (green) differentiation. Profits are increasing in the misperception of quality, while, the investment in green quality decreases the more the goods are substitutes. We further consider the introduction of either an emission tax or an environmental standard. The former rises the investment in environmental quality due to the higher cost of production, whereas in equilibrium quality always improves after the introduction of the latter. We show that an optimal environmental standard is an effective regulatory instrument against greenwashing and that the efficacy of the interventions is conditioned to the damage distribution and the aggregate level of emission.

JEL-codes: L13 L51 Q50 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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