Incentives, Green Preferences, and Private Provision of Impure Public Goods

Casey Wichman

RFF Working Paper Series from Resources for the Future

Abstract: Pro-environmental preferences are being used increasingly as environmental policy tools. In this paper, I consider the role of heterogeneous green preferences for private provision of environmental goods that have both private and public characteristics. Under diff erent assumptions of information available to a regulator, I characterize equilibrium properties of several mechanisms. I find incentive-compatible Nash equilibria that provide socially optimal public goods provision when the regulator can enforce individual consumption contracts, as well as when reported consumption contracts are supplemented with group penalties. The role of budget balancing is recast as a policy intervention for correcting environmental market failures. Throughout the paper, I ground the exposition with examples of consumer behavior in the context of green electricity programs and goal setting for energy conservation.

Keywords: Private provision of public goods; impure public goods; green markets; incentives; preference revelation; environmental regulation; mechanism design (search for similar items in EconPapers)
JEL-codes: D82 H41 L51 Q58 (search for similar items in EconPapers)
Date: 2016-02-11
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Citations: View citations in EconPapers (11)

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Journal Article: Incentives, green preferences, and private provision of impure public goods (2016)
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