Green Consumers and the Transition to Sustainable Production

Ahmed Kouider Aissa and Alessandro Tampieri

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: We investigate the interaction between consumers' environmental concern, environmental corporate social responsibility (ECSR), and environmental regulations during the transition towards sustainable production. We study an economy in which a subpopulation of consumers is sensitive to environmental issues. In this setting, we analyse the steady-state equilibrium in a framework à la Droste et al. (2002), where rms compete in quantities and decide whether or not to engage in ECSR activities, which ultimately reduce the impact of production on the environment. We nd that the variation of social welfare with the increase of ECSR rms is U-shaped, driven by the variation in consumer surplus, while environmental damage is minimised when all rms adopt ECSR practices. Therefore, the short-run social incentives to pursue a transition towards sustainable production are scarce. In contrast, there exists a private incentive to internalise emissions and to proliferate ECSR rms, as prots increase with the proportion of ECSR rms.

Keywords: Mixed oligopoly markets; emission reduction investment; evolutionary dynamics (search for similar items in EconPapers)
JEL-codes: C73 H23 L13 L21 M14 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2024
New Economics Papers: this item is included in nep-ene, nep-env, nep-gth and nep-ind
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