Promotion of Eco-Products and Environmental Regulation with Learning-by-Doing

Makoto Kakinaka and Koji Kotani

No EMS_2006_07, Working Papers from Research Institute, International University of Japan

Abstract: This paper studies a dynamic model of eco-product planning, where an eco-product supplied by a single producer is differentiated from a conventional product generating negative externalities, and the production technology of the eco-product is characterized by learning-by-doing. The result states that the learning effect causes the eco-product to be more promoted and brings about more favorable outcomes on social welfare. This study also examines how the environmental regulation on the conventional product, associated with a price distortion, affects the promotion of the eco-product, consumer surplus, the single producer's profit, and negative externalities. It is shown that the impact of the environmental regulation is similar to that of a rise in the learning effect. Furthermore, whether or not the environmental regulation should be adopted is highly dependent on the degree of the learning effect. In the presence of a large learning potential, the environmental regulation may not only promote the eco-product effectively but also improve social welfare through intensifying the learning effect.

Keywords: eco-product; environmental regulation; product differentiation; learning-by-doing; optimal control (search for similar items in EconPapers)
JEL-codes: Q55 Q58 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-03
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https://www.iuj.ac.jp/workingpapers/index.cfm?File=EMS_2006_07.pdf First version, 2006 (application/pdf)

Related works:
Working Paper: Some implications of environmental regulation on social welfare under learning-by-doing of eco-products (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:iuj:wpaper:ems_2006_07

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