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Efficiency properties of binary ecolabeling
Abstract
We investigate efficiency properties of binary ecolabels in a homogeneous good market with heterogeneous consumers. Faced with the minimum technology standard, firms make endogenous entry, certification, and price/quantity decisions. We consider both perfect and imperfect competition with or without sunk fixed costs. Our findings are as follows. Ecolabeling alone does not achieve the first-best outcome and, to achieve the second best, may need to set the standard less strict than the efficient level. Without sunk fixed costs, ecolabeling can achieve the first-best outcome provided that both the technology standard and the complementary pollution tax are set at efficient levels. With sunk fixed costs, however, differential excise taxes that would restore allocative efficiency induce more entry than optimal, and thus, can be even welfare decreasing relative to no tax outcome. Tightening the technology standard may ameliorate such an adverse effect of the corrective tax system by reducing excessive entry and pollution per output by the certified firms.Highlights► We investigate efficiency properties of binary ecolabels in a market with heterogeneous consumers. ► Firms make endogenous entry, certification/technology, and price/quantity decisions. ► Without fixed costs, a mix of technology standard and corrective tax can restore full efficiency. ► With fixed costs, the corrective tax can be welfare decreasing relative to no tax. ► Tightening technology standard may mitigate such an adverse effect of the corrective tax.
... For abstract models, different classic models like Cournot models are used to represent oligopolistic (Amir and Lazzati, 2011;Dey et al., 2014;Norbäck et al., 2014) and duopolistic competition (Glazer et al., 2010;Ziesemer and Michaelis, 2011;Mantena and Saha, 2012;Wang and Chiou, 2015), while the general equilibrium theory (Bajona and Kelly, 2012) is represented by equilibrium pricing model. Some authors preferred to break some economic rules and build their mathematical models (Konishi, 2011;Navarro, 2012;Krautheim and Verdier, 2016). For applied models, authors used regressions (Kandogan, 2012;Horbach and Rennings, 2013;Peuckert, 2014) and an agent-based model inspired by IO assumptions (Van der Vooren and Brouillat, 2015). ...
... The latest authors concluded that raising taxes is effective to reduce pollution. Konishi (2011) examined how the policy planner should consider environmental improvement as a sunk cost for firms and concluded that taxes alone are not sufficient to realize the best outcome for the economy; regulation is more than needed. According to the previous author, imposing a superior technology is necessary to limit 'over-entry' of firms, and thereby provides the best outcome for the economy. ...
... A utility function represents consumer satisfaction. In the externality theory, the customer can be homogeneous (Ziesemer and Michaelis, 2011;Horbach and Rennings, 2013) or differentiated (Konishi, 2011;Krautheim and Verdier, 2016). In the path dependence theory, the utility is split between the value of the goods and the network effects. ...
This literature review puts forward a comparison between the traditional seller, usually represented
by classic Industrial Organization (IO) models, and system providers, which are illustrated by Product
Service System (PSS) models. A multidisciplinary systematic literature review, that compares PSS and
IO models, is conducted, and ends up in to define PSS as a technology highlights the differences and
similarities between classic IO and classic PSS and evaluate the weakness and strengths of different
models. In total, 148 articles from different disciplines have been investigated, and a different
understanding of PSS is provided. A new IO framework, that considers classic sellers and PSSs
providers, is established to preserve PSS specificities and stress the role of policy maker and
competition for PSSs expansion.
... It is well-known from the literature that ecolabeling can complement more conventional policy instruments such as taxes and subsidies in stimulating more sustainable development of the economy [3,8,9]. Ecolabeling increases consumer awareness and leads to the emergence of new environmentally friendly goods, technologies and production systems [6,10,11]. ...
Ecolabeling can complement more conventional policy instruments such as taxes and subsidies to stimulate more sustainable development of the economy. However, in practice, ecolabels may not always comply with legal requirements in terms of reliability, accuracy and clarity, and sometimes deliberately mislead the consumer. In Russia and many other developing countries, the problem of inaccurate information on the environmental properties of goods and services is still not recognized. The only regulatory document that currently defines the basic principles for developing and using environmental labels and declarations is the national versions of international standards ISO 14020/14021/14024/14025-Environmental Labels Package. This paper contributes to the literature in two main dimensions. It assesses the degree of prevalence of ecolabeling in the Russian market of everyday goods and the reliability and informational content of frequently used labels (supply-side research). Second, it estimates the consumers’ awareness and reaction to ecolabeled products (demand-side research). The most obvious finding to emerge from this study is that low consumer awareness keeps the level of greenwashing low, but at the same time does not stimulate eco-innovations. We suggest developing smartphone applications that allow buyers to check the compliance of ecolabels on a product with ISO standards directly during the shopping process. We propose to use this approach as a cost-effective and straightforward way to simultaneously raise consumer awareness of ecolabeling and reduce the likelihood of greenwashing.
... The literature presents another typology which describes two ecolabels; the Bbinary ecolabel^and the Bmulti-tier^or graded ecolabels (Bleda and Valente 2009;Konishi 2011). The first case refers to the standard seal which is given or not to products according to an assessment; some examples include the EU Ecolabel and Marine Stewardship Council Ecolabel. ...
Purpose
The European Ecolabel (EU Flower) has the mission to encourage cleaner production and influence consumers to promote Europe’s transition to a circular economy. Nonetheless, little is known about EU Ecolabel evolution; it is not clear what the drivers that encourage its implementation are. Thus, this study aims to assess the growing acceptance of the EU Ecolabel in the European Union, and Spain more specifically, by examining product and service categories and geographical regions.
Methods
The methodological approach taken in this study is a mixed methodology based on the triangulation method by consulting the EU Ecolabel scheme database, EU Ecolabel delegates from some autonomous regions, and the academic literature. Also, a geographic analysis was run in the ArcGIS Software with data about the accumulation of licenses assigned in 2016.
Results and discussion
The analysis shows that most products in Spain that have been awarded the EU Ecolabel belong to the following categories: Do-It-Yourself Products (paint and varnish), Paper Products, Cleaning Up Products, and Electronic Equipment. At the same time, the study showed that this ecolabel faces significant obstacles in its diffusion, such as the competition with environmental labels launched previously in Europe and other regional labels.
Conclusions
The results of this study indicate the existence of five drivers that may encourage the implementation of EU Flower in a region: (1) public management, (2) communication strategy, (3) sustainable public procurement criteria, (4) local income per capita, and (5) international trade incentives.
Finally, this study provides essential recommendations for policymakers to trigger ecolabeling practices such as the need to improve the understanding of the EU ecolabel impact in different levels of activity, which means countries, regions, industrial clusters, firms, and consumers. Also, this investigation identifies areas for further research, and it expresses the need to develop business case studies about ecolabeling with the objective to visualize this phenomenon as an eco-innovation process.
... Moreover, since products are generally not 100% sustainable, sustainability is not a dichotomous product attribute (Banerjee, Gulas, & Iyer, 1995). Thus, the effectiveness of labels depends on how informative they are (Konishi, 2011). Hence, this paper suggests that sustainability labels with scale ratings would more effectively capture and communicate the specificity of sustainability attributes, influencing product perceptions and purchase outcomes under certain conditions. ...
Little research has explicitly considered the influence of retailer-provided sustainability disclosure at points of purchase for brands within specific product categories. Thus, this paper examines the conditions wherein sustainability labels with scale ratings assist consumers in determining the sustainability performance of products. Study 1 findings demonstrate that, when concerned with social desirability, consumers’ product evaluations are greater for products with high (vs. low) sustainability levels. When not concerned with social desirability, this pattern exists so long as the levels are consistent with category-based expectations. Extending these findings, Study 2 results show that evaluations and purchase-related outcomes are greater for products with high levels within (vs. outside) expectations for low-efficacy consumers not concerned with social desirability. Yet, these effects are mitigated for low-efficacy consumers concerned with social desirability. Further, Study 3 suggests that the effect is attenuated for low-efficacy consumers at low levels and for high-efficacy consumers irrespective of sustainability level.
... Nevertheless, almost a third earn less than 700€ per month, and just 26% earn more than 2000€. The income issue is relevant because multiple authors claim that green consumers are usually willing to pay a premium for environmentally friendly products, especially when they are awarded with an eco-label (Bjørner et al., 2004;Konishi, 2011;Rubik et al., 2008). ...
The growing complexity of environmental issues and its connection with the way in which society is consuming make essential to understand the extent of the consumers' awareness regarding the sustainable aspects. Therefore, the aim of this study is to explore the motivations of sustainable consumers and how those motivations should be considered by consumer organizations for improving their purposes and services to drive environmental sustainability. The research presents a content analysis of the websites of 30 Ibero-American organizations that promote sustainable consumption habits, classifying those organizations according to their purposes and services based on the six dimensions of consumer sustainability awareness. Then, a questionnaire was sent to a sample of Spanish-speaking consumers of sustainable products in order to assess their motivations for choosing environmentally friendly products or services. Then, an analysis was performed by comparing both results. As a result, the study offers new knowledge about the perception of sustainability consciousness across Spanish-speaking consumers and of the purpose of consumer organizations. It also provides valuable information for companies and marketers who wish to align their eco-innovation strategies with green consumers’ motivations.
Chapter 3 demonstrated that social continuity can be depicted by weak sustainability (which is close to a pure economic model) in terms of maximisation of the total welfare (i.e., efficiency), provided that the social discount rate σ is at 0.
Environmental problems resulting from the use of plastics in mass products are becoming increasingly serious, and the exploitation of scarce oil resources also poses unimagined long-term risks. Economic models attempt to demonstrate the effectiveness of regulatory measures, but instead of retaining polluting technologies and reducing market volume, petroplastics in products could be gradually replaced by compensating biopolymers. This study investigates how much of the original market volume is recovered by plastics substitution while maintaining market-related efficiency criteria. To this end, an economic market model is developed and information on estimated damage potential and willingness-to-pay is supplemented by means of a consumer study. The static analyses show that, depending on the estimates, the optimal and most efficient market volume after substitution is between 79.5% and 84.7% of the former market volume in petrochemical goods. The higher the damage estimate, the lower the most efficient bioplastics share, but at least 50% and at most 90.7%. Complete substitution is inefficient and requires consumers to perceive a much higher utility from biopolymers compared to the estimated avoidance of damage. All in all, the biopolymer treatment of synthetic products, such as clothing, is proving to be a promising internalisation technology, but requires further market analysis.
Germany set a new record in waste production in 2017 and thus occupies one of the top ranks in the EU in terms of garbage creation. However, whether and how much of the waste can be recycled at all depends strongly on the material and its properties, whereby the recycling rate for plastics is still moderate. Environmental damage from plastic packaging can be avoided by using biobased substitute materials. To achieve this, the costs for plastic must first be increased in order to make these alternatives attractive in terms of price. This paper reports on a study dealing with regulatory measures to mitigate the waste problem from an economic point of view. It discusses the results of a choice-based experiment with 253 industrial decision-makers from the German Food and Technics retail segment. Regulatory scenarios, such as Pigou tax on plastic packaging or product labelling about environmental impact, were specified as a means to avoid market failure, and the attitude of the respondents were measured. The data analysis showed that the additional costs of switching to biomaterials are more likely to be passed on to the market by SMEs (100%) in the form of price increases (p = .01; phi = .28) and that quality reductions tend to be considered by the food industry (p < .05; phi = .39). Hence, large companies (65.2%) and the Technical goods traders (35.7%) showed a tendency to be prepared to bear part of the change costs. The packaging weight was favoured by the majority as the basis for taxation (>48%), and it was proposed to indicate the packing's CO2-emissions using a traffic light scheme (>47%). Finally, it was found that trading companies in general had only a small influence on the packaging properties of their suppliers' products (<32%). From this it can be concluded that impulses for plastic avoidance should rather be set by government regulatory instruments than by self-regulation on the part of the retail industry, which, however, with an average of 30% plastic recycling in packaging, is already making a significant contribution to avoidance. Finally, it is recommended that economic explanatory models should integrate the variables Company Size and Product Category for reliable economic predictions.
Bio-based plastics, such as Wood-Plastics Composites (WPC), represent a new generation of sustainable building materials. They contain up to 80% of renewable resources and comparatively less fossil-based plastics. Reportedly, WPC products preserve crude oil for upcoming generations. However, WPC suffers from a moderate consumer acceptance due to its plastics-like appearance and a lack of differentiation to low-price plastics. Obviously, WPC hardly takes advantage of its environmental opportunity. This paper examines to what extend WPC could benefit from an eco-label as a means of self-regulation and how internalization acts in favor of society. An economic impact analysis is carried out using basic knowledge from a comprehensive literature research about eco-labeling effects on market allocation and welfare. The current WPC-market was subject of further investigations to find out whether a WPC eco-label has a welfare-increasing potential. The analysis revealed that labels are currently in use for differentiation among WPC products which yields higher profits and thus reduces consumer surplus. From social perspective it would be more beneficial to employ such labels for better distinguishing between pure plastics and WPC. In such a case a WPC eco-label would perfectly reduce externalities from crude oil plastics production and this goes along with a growing demand for green-plastics and higher willingness-to-pay of eco-aware consumers which is beneficial for the development of a green building market. Finally, social welfare is most likely to be higher than without labeling even if producer profit increased as well. Nevertheless, total welfare is expected to be maximal only if a public regulator prevents the industry from profit maximization which, however, is not recommendable for the investment-intensive WPC-branch.
We construct a model to analyze an oligopoly with two types of technology that produce an undifferentiated product: a cleaner but more expensive technology and a dirtier but less expensive technology. We construct a two-stage model in which firms choose their technology in the first stage and their profit maximizing quantities in the second stage. We then introduce stage zero, in which the government chooses its policy: a lump-sum fee, a specific tax, a subsidy, or a permit to label the product produced with the cleaner technology. We show that the government can achieve the highest social welfare with eco-labeling when most of the consumers are eco-conscious. Otherwise a subsidy or a tax achieves the highest social welfare depending on the degree of environmental damage.
How do multiple attributes of a product jointly determine a seller's disclosure incentives? I model a monopolist whose product is characterized by vertical quality and a horizontal attribute. Contrary to the unraveling theory, the monopolist in equilibrium does not always choose disclosure. When the product's quality is common knowledge, a monopolist with higher quality is less likely to disclose the horizontal attribute. Notably, the monopolist may choose nondisclosure when his product has the highest quality. The results shed light on governments' mandatory disclosure policies and companies' marketing strategies.
Firms would like to capitalize on consumers' willingness to pay more for goods that use environmentally friendly production techniques, but have difficulty credibly conveying their environmental friendliness. One possible remedy is “ecolabeling,” where a third party certifies firms' products. To model this phenomenon, I analyzed a market characterized by asymmetric information in which firms decide whether to seek an ecolabel. Market equilibrium is discussed in three settings: where both technologies and outputs are fixed (so the only choice is whether to seek certification), where technologies are fixed but outputs are not, and where firms can choose both technology and output.
Models of giving have often been based on altruism. Examples include charity and intergenerational transfers. The literatures on both subjects have centered around neutrality hypotheses: charity is subject to complete crowding out, while intergenerational transfers are subject to Ricardian equivalence. This paper formally develops a model of giving in which altruism is not "pure." In particular, people are assumed to get a "warm glow" from giving. Contrary to the previous literature, this model generates identifiable comparative statics results that show that crowding out of charity is incomplete and that government debt will have Keynesian effects. Copyright 1989 by University of Chicago Press.
This paper shows that (i) fixed costs of sufficient magnitude assure the existence of a vector of sustainable prices for the
products of a natural monopolist—prices making him invulnerable against entry; (ii) nevertheless, fixed costs do not constitute
barriers to entry; that is, they need not have undesirable welfare consequences; (iii) indeed, in market forms that we call
perfectly contestable large fixed costs are completely compatible with many desirable attributes of competitive equilibrium; (iv) sunk costs do,
however, constitute barriers to entry; and (v) finally, the profit and welfare consequences of entry barriers are described
formally.
A three-stage game of production technology, signal and price competition is developed to study the impact of eco-labeling,
in a duopoly model of vertical product differentiation. The production technology and the subsequent pollution level are non-observable
by consumers. The only way to inform consumers about the environmental quality of the product is to stick an ecolabel on it.
However, a polluting firm may also usurp the ecolabel by incurring a certain cost. By assuming that consumers are altruistic
and willing to pay for environmental quality, we show that ecolabels can reduce the pollution level. Finally and importantly,
under restrictive conditions on labeling cost, ecolabeling can constitute to some extent an environmentally effective and
economically efficient policy. However, ecolabeling cannot alone internalize the whole negative externality until the optimum
point.
This paper applies two recently developed trading algorithms to a water quality trading (WQT) market located in the Cub River sub-basin of Utah; a market that includes both point and nonpoint sources. The algorithms account for three complications that naturally arise in WQT markets: (1) combinatorial matching of traders, (2) trader heterogeneity, and (3) discreteness in abatement technology. The algorithms enable a full characterization of the market’s performance by distinguishing a specific pattern of trade among market participants, which in turn results in as detailed a reduced- cost trading benchmark as possible for the basin. Contrary to the commonly held belief that relatively high point-source abatement costs necessitate nonpoint-source abatement effort, we find that in a WQT market where each source is required to reduce its pollution loadings it may be cheaper for point sources to sell abatement credits to nonpoint sources.
We analyse optimal environmental policies in a market that is vertically differentiated in terms of the energy efficiency of products. Considering energy taxes, subsidies to firms for investment in more eco-friendly products, and product standards, we are particularly interested in how distributional goals in addition to environmental goals shape the choice of policy instruments. Surprisingly, we find that an industry-friendly government levies an energy tax to supplement a lax product standard, but shies away from subsidies to firms. By contrast, a consumer-friendly government relies heavily on a strict product standard and in addition implements a moderate subsidy to firms, but avoids energy taxes.
When people make donations to privately provided public goods, such as charity, there may be many factors influencing their decision other than altruism. Social pressure, guilt, sympathy, or simply a desire for a "warm glow" may all be important. This paper considers such impure altruism formally and develops a wide set of implications. In particular, this paper discusses the invariance proposition of public goods, solves for the sufficient conditions for neutrality to hold, examines the optimal tax treatment of charitable giving, and calibrates the model based on econometric studies in order to consider policy experiments. Impure altruism is shown to be more consistent with observed patterns of giving than the conventional pure altruism approach, and to have policy implications that may differ widely from those of the conventional models. Copyright 1990 by Royal Economic Society.
After the work of the late Professor F. Y. Edgeworth one may doubt that anything further can be said on the theory of competition among a small number of entrepreneurs. However, one important feature of actual business seems until recently to have escaped scrutiny. This is the fact that of all the purchasers of a commodity, some buy from one seller, some from another, in spite of moderate differences of price. If the purveyor of an article gradually increases his price while his rivals keep theirs fixed, the diminution in volume of his sales will in general take place continuously rather than in the abrupt way which has tacitly been assumed.
We model firms as competing for socially responsible consumers by linking the provision of a public good (environmentally friendly or socially responsible activities) to sales of their private goods. In many cases, too little of the public good is provided, but under certain conditions, competition leads to excessive provision. Further, there is generally a trade-off between more efficient provision of the private and the public good. Our results indicate that the level of private provision of the public good varies inversely with the competitiveness of the private-good market and that the types of public goods provided are biased toward those for which consumers have high participation value.
Consumer survey data, collected in former West and East Berlin after the unification of Germany are used to address the issue of willingness to pay (WTP) for foods produced with techniques consistent with environmental stewardship. Results show differences in the WTP between residents of the two former German states attributed to area of residence. Residents of eastern city districts were generally less willing to pay a premium for foods produced with environmental- friendly methods which suggests that marketing of such foods will be more successful in western districts, unless educational efforts can be used to bridge the gap in the stated WTP.
The Theory of Industrial Organization is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level. Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas while working at an intuitive level. To aid students at different levels, each chapter is divided into a main text and supplementary section containing more advanced material. Each chapter opens with elementary models and builds on this base to incorporate current research in a coherent synthesis. Tirole begins with a background discussion of the theory of the firm. In part I he develops the modern theory of monopoly, addressing single product and multi product pricing, static and intertemporal price discrimination, quality choice, reputation, and vertical restraints. In part II, Tirole takes up strategic interaction between firms, starting with a novel treatment of the Bertrand-Cournot interdependent pricing problem. He studies how capacity constraints, repeated interaction, product positioning, advertising, and asymmetric information affect competition or tacit collusion. He then develops topics having to do with long term competition, including barriers to entry, contestability, exit, and research and development. He concludes with a "game theory user's manual" and a section of review exercises.
This paper develops an impure public good model to analyze the comparative statics of environmentally friendly consumption. “Green” products are treated as impure public goods that arise through joint production of a private characteristic and an environmental public characteristic. The model is distinct from existing impure public good models because of the way it considers the availability of substitutes. Specifically, the model accounts for the way that the jointly produced characteristics of a green product may be available separately as well—through a conventional-good substitute, direct donations to improve environmental quality, or both. The analysis provides a theoretical foundation for understanding how demand for green products and demand for environmental quality depend on market prices, green-production technologies, and ambient environmental quality. The comparative static results generate new insights into the important and sometimes counterintuitive relationship between demand for green products and demand for environmental quality.
A three-stage game of investment, environmental quality provision and price competition is developed to study the impact of green technology investment (eco-labeling), in a duopoly model of vertical product differentiation. The firms’ incentives to invest in green technologies depend on their relative cost structure. When firms are identical with respect to fixed costs, both firms will always invest, but if one firm is more efficient in investing, then the other firm may or may not invest depending on the level of unit cost of investment. Quality competition will be tighter when the low-quality firm is more efficient, and looser when the high-quality firm is more efficient in investing. Socially optimal investment for both firms is always positive, but lower than in the duopoly solution. In the absence of environmental externalities, the quality dispersion chosen by profit maximizing firms may be too high or too low, while environmental externalities increase the possibility low-quality dispersion that is too low within the market solution. Finally, and importantly, ecolabeling can be used as a means of reducing excessive investment and increasing environmental quality that is too low.
We explain why some firms voluntarily overcomply with environmental regulation. In our model all consumers value environmental quality but differ in their willingness to pay which depends on their income levels. Publicly available information on environmental performance of firms enables consumers to identify clean firms. Firms participate in a two-stage duopoly game where they first choose their levels of cleaning technology and next engage in price competition. The market gets segmented by income levels. A minimum standard binding on the dirty firm has the effect of improving the performance of the cleaner firm. A subsidy obtains the same competitive outcome.
We study policy measures to improve environmental quality in the presence of environmentally aware consumers. We consider two sets of policy instruments—uniform policies for the firms and policies that discriminate between the firms based on their environmental quality. For the latter set, either the better performer is rewarded with a subsidy or, the worse performer is punished with a tax. We find that while a uniform subsidy policy improves average environmental quality, a uniform tax policy worsens it. Further while a discriminatory subsidy policy reduces total pollution and enhances aggregate welfare, a discriminatory tax policy may increase total pollution and may reduce aggregate welfare.
This paper develops a general model of private provision of a public good that includes the option to consume an impure public good. The model is used to investigate the positive and normative consequences of "green markets," which are based on technologies with joint production of a private good and an environmental public good. It is shown that under reasonable conditions green markets can have beneficial or detrimental effects on environmental quality and social welfare. The analysis applies equally to nonenvironmental choice settings, with examples ranging from socially responsible investments to commercial activities associated with charitable fund-raising.
We analyze models of product differentiation with perfect price discrimination and free entry. With a fixed number of firms, and in the absence of coordination failures, perfect price discrimination provides incentives for firms to choose product characteristics in a socially optimal way. However, with free entry, the number of firms is always excessive. Our results apply to a large class of models of product differentiation. They also apply to models of common agency or lobbying with free entry and imply that one has excessive entry into the ranks of the principals.
I propose an empirical model to analyze product differentiation and oligopoly market structure. The model endogenizes firms' product-type decisions, measures how effects of competitors differ depending on their product types, and can incorporate alternative specifications for the product choice game. I estimate using data from oligopoly motel markets along U.S. interstate highways; motel establishments are characterized by their quality choice. The results demonstrate a strong incentive for firms to differentiate. The effects of demand characteristics on product choice are also significant. Game specification is of minor importance, although differences in the games analyzed do affect equilibrium market structure predictions in some cases.
This article analyzes the duality of prices and quantities in a differentiated duopoly. It is shown that if firms can only make two types of binding contracts with consumers, the price contract and the quantity contract, it is a dominant strategy for each firm to choose the quantity (price) contract, provided the goods are substitutes (complements).
This paper studies the socially optimal emission and commodity tax policy when consumers are willing to pay a price-premium for environmentally friendlier variants of a commodity vertically differentiated in environmental quality. The first-best levels of quality can be obtained by a combination of a uniform ad valorem tax and an emission tax (or a subsidy for buying green products). The first-best emission tax is higher than the social valuation of the positive externality associated with average environmental quality. Regardless of environmentally conscious consumers, if only one instrument is available, the second-best emission tax is equal to the social valuation of the positive externality associated with average environmental quality. A uniform ad valorem tax increases welfare only if the social valuation of the positive externality associated with average environmental quality is low enough. Copyright Springer 2005
Increasing environmental awareness may affect the pleasure of consuming a good for which an environment friendly substitute is available. In this paper, we investigate the market implication of product differentiation when customers are concerned about environmental aspects of the good. We use the spatial duopoly model to determine how environmental concern affects prices, product characteristics and market shares of the competing firms. Our analysis is based on a two-stage game, where at the first stage each firm chooses the characteristic of its product. At the second stage, each firm chooses its price. Equilibrium prices and market shares are affected by consumer awareness of the environment and by the higher costs for producing those goods. As for the Nash equilibria in the characteristics, we find three equilibria depending on the parameter constellation. In order to find out whether the market functions in an optimal way, we determine the choice of environmental characteristics by a welfare maximizing authority. The objective of the paper is to understand the environmental quality choices facing firms and to provide policies that would align private choices with the social optimum. Copyright Springer 2005
The authors introduce commodity taxation into a vertical differentiation model with endogenous product selection. They show that a uniform ad valorem tax lowers both qualities, distorts the allocation of consumers between firms, and lowers the consumer prices of both variants. A small uniform tax is always welfare-improving over the no-tax equilibrium. A differentiation of tax rates may or may not be desirable on welfare grounds. If a welfare improvement is possible through a nonuniform tax, it is always the high-quality variant that must be taxed at a higher rate. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Emission taxes under both fixed-number oligopoly and endogenous market structure, which are the most relevant market structures for policy issues, are examined. In the latter case, and contrary to what is expected under imperfect competition, the optimal tax could exceed marginal external damages, which implies that externalities generated by oligopolistic firms could be optimally controlled by overinternalizing environmental damages. Under endogenous market structure, a scheme consisting of a license fee and a second-best underinternalizing emission tax can increase social welfare as compared to the use of a single emission tax exceeding marginal damages. Copyright 1995 by The editors of the Scandinavian Journal of Economics.
Provision of information on the environmental effects of consumption is often put forward as an appealing alternative to traditional means of environmental regulation such as permits and environmental taxes. When consumers in opinion polls are asked if their purchasing decisions would be influenced by information on environmental or ethical aspects of products, the majority seem very ready to say yes. However, evidence for actual behavior along these lines is still limited. In this paper a mixed logit model is used to quantify the effect of a certified environmental label (the Nordic Swan) on consumers’ brand choices of toilet paper, paper towels and detergents, using a large Danish consumer panel with detailed information on actual purchases from the beginning of 1997 to January 2001. It is found that the Nordic Swan label has had a significant effect on consumers’ brand choices for toilet paper, corresponding to a marginal willingness to pay for the certified environmental label of 13–18% of the price and it also appears that information on environmental performance has had an effect on consumers’ choice of detergent.
The possibility of measuring and comparing sustainability performance is generally taken for granted in management studies and practices based on the evaluation, selection and ranking of the supposedly best companies in the field. The purpose of this article is to question this basic assumption by analyzing the comparability of sustainability performance through a systematic review of 12 mining company reports using Global Reporting Initiative (GRI) guidelines. The analysis of information based on 92 GRI indicators raises serious questions concerning the hypothesis of measurability and comparability of sustainability performance, drawing attention to the main reasons that make it very difficult if not impossible to establish a credible and justifiable classification among organizations.
La possibilité de mesurer et de comparer les performances de développement durable est généralement prise pour acquise tant dans les recherches en gestion que dans les pratiques de classement ou de sélection des meilleures entreprises dans ce domaine. L’objectif de cet article est d’examiner cette hypothèse de mesurabilité et de comparabilité des performances de développement durable à partir de l’étude systématique de 12 rapports d’entreprises minières utilisant le même guideline du Global Reporting Initiative (GRI). L’analyse des informations relatives aux 92 indicateurs du GRI utilisés remet en cause l’hypothèse de comparabilité des performances de développement durable en mettant en lumière les principales raisons qui rendent pratiquement impossible l’établissement d’un classement crédible et justifiable entre les entreprises.
International Trade Policy with Imperfect Competition—Special Papers in International Economics Theories of oligopoly behavior
- R Pomfret
Pomfret, R., 1992. International Trade Policy with Imperfect Competition—Special Papers in International Economics. Princeton University Press, New Jersey. Shapiro, C., 1989. Theories of oligopoly behavior. In: Schmalensee, R., Willig, R.D. (Eds.), Handbook of Industrial Organization, vol. I. Elsevier Science Publishers.