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Green Consumers and the Transition to Sustainable Production

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  • Ahmed Kouider Aissa
  • Alessandro Tampieri

Abstract

We investigate the interaction between consumers' environmental concern, environmental corporate social responsibility (ECSR), and environmental regulations during the transition towards sustainable production. We study an economy in which a subpopulation of consumers is sensitive to environmental issues. In this setting, we analyse the steady-state equilibrium in a framework à la Droste et al. (2002), where rms compete in quantities and decide whether or not to engage in ECSR activities, which ultimately reduce the impact of production on the environment. We nd that the variation of social welfare with the increase of ECSR rms is U-shaped, driven by the variation in consumer surplus, while environmental damage is minimised when all rms adopt ECSR practices. Therefore, the short-run social incentives to pursue a transition towards sustainable production are scarce. In contrast, there exists a private incentive to internalise emissions and to proliferate ECSR rms, as prots increase with the proportion of ECSR rms.

Suggested Citation

  • Ahmed Kouider Aissa & Alessandro Tampieri, 2024. "Green Consumers and the Transition to Sustainable Production," Working Papers - Economics wp2024_04.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2024_04.rdf
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    More about this item

    Keywords

    Mixed oligopoly markets; emission reduction investment; evolutionary dynamics;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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