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Green Consumers, Emission Taxes, and Firm Relocation

Laura Birg and Jan Voßwinkel

VfS Annual Conference 2020 (Virtual Conference): Gender Economics from Verein für Socialpolitik / German Economic Association

Abstract: This paper studies the interaction of environmental policy and green preferences under potential firm relocation. A green firm and a brown firm choose the environ- mental quality of their products. Both an emission tax and consumers'willingness to pay for green products encourage investment in environmental quality. Firms may relocate to avoid taxation or abstain from investment in environmental quality to produce at lower cost. If the green firm does not relocate, both the green firm and the brown firm provide higher quality levels. Compared to first-best taxation, the equilibrium emission tax is lower (higher) if only the brown (green) firm relocates.

Keywords: environmental policy; emission tax; green consumers; relocation (search for similar items in EconPapers)
JEL-codes: F18 H23 L13 Q58 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-ene, nep-env, nep-ore and nep-pbe
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https://www.econstor.eu/bitstream/10419/224639/1/vfs-2020-pid-40474.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc20:224639

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