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Is Environmentalism the Right Strategy to Decarbonize the World?

Author

Listed:
  • Marini, Marco A.
  • Tarola, Ornella
  • Thisse, Jacques-Francois
Abstract
We study how the supply of environmentalism, which is defined by psychic benefits (costs) associated with the purchase of high-environmental (low-environmental) qualities, affects the way firms choose their prices and products and the ensuing consequences for the global level of pollution. Contrary to general belief, a high supply of environmentalism does not necessarily give rise to a better environmental outcome because it endows the green firms with more market power which they use to charge higher prices. Nonetheless, environmentalism can be used to effectively complement more traditional policy instruments such as a minimum environmental standard.

Suggested Citation

  • Marini, Marco A. & Tarola, Ornella & Thisse, Jacques-Francois, 2021. "Is Environmentalism the Right Strategy to Decarbonize the World?," MPRA Paper 106340, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:106340
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    Cited by:

    1. Stefan Ambec & Philippe de Donder, 2022. "Environmental policy with green consumerism," Post-Print hal-04755367, HAL.
    2. Ambec, Stefan & De Donder, Philippe, 2022. "Environmental policy with green consumerism," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    3. Dorothée Brécard & Mireille Chiroleu-Assouline, 2024. "Information campaigns and ecolabels by environmental NGOs: Effective strategies to eliminate environmentally harmful components?," PSE-Ecole d'économie de Paris (Postprint) hal-04592469, HAL.

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    More about this item

    Keywords

    environmentalism; psychic costs and benefits; vertical product differentiation; environmental policy;
    All these keywords.

    JEL classification:

    • D0 - Microeconomics - - General
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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