Market Equilibrium in the Presence of Green Consumers and Responsible Firms: A Comparative Statics Analysis

Nicola Doni (nicola.doni@unifi.it) and Giorgio Ricchiuti

No 2011.33, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper analyzes how the interaction between green consumers and responsible firms affects the market equilibrium. The main result is that a higher responsibility by both producers and consumers can have different impacts on the efficiency of the firms’ abatement activity, depending on the nature of the cleaning costs. When the abatement costs are fixed, the efficiency of the clean-up effort is always increasing in their degree of responsibility. On the other hand, when the abatement costs are variable, a higher level of responsibility may reduce social welfare. Finally, the first best allocation is never reached, even in the presence of the highest credible level of responsibility of both consumers and producers.

Keywords: Green Consumers; Corporate Social Responsibility; Vertical Differentiation (search for similar items in EconPapers)
JEL-codes: D62 L13 L21 (search for similar items in EconPapers)
Date: 2011-04
New Economics Papers: this item is included in nep-agr and nep-env
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Market equilibrium in the presence of green consumers and responsible firms: A comparative statics analysis (2013)
Working Paper: Market Equilibrium in the Presence of Green Consumers and Responsible Firms: A Comparative Statics Analysis (2011)
Working Paper: Market Equilibrium in the Presence of Green Consumers and Responsible Firms: a Comparative Statics Analysis (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2011.33

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