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Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers

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  • Maria José Gil-Moltó
  • Dimitrios Varvarigos

Abstract

We model a market with environmentally conscious consumers and a duopoly in which firms consider the adoption of a clean technology. We show that as pollution increases, consumers shift more resources to the environmental activities, thereby affecting negatively the demand faced by the duopoly. This effect generates incentives for firms to adopt the clean technology even in the absence of emissions taxes. When such taxes are considered, our results indicate that the benefit of adopting the clean technology is initially increasing and then decreasing in the emission tax. The range of values for which the emission tax increases this benefit becomes narrower when the consumers’ environmental awareness is stronger.

Suggested Citation

  • Maria José Gil-Moltó & Dimitrios Varvarigos, 2011. "Emission Taxes and the Adoption of Cleaner Technologies: The Case of Environmentally Conscious Consumers," Discussion Papers in Economics 11/49, Division of Economics, School of Business, University of Leicester.
    • Handle: RePEc:lec:leecon:11/49
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    References listed on IDEAS

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    Cited by:

    1. García-Alaminos, Ángela & Rubio, Santiago J., 2019. "Emission Taxes, Feed-in Subsidies and the Investment in a Clean Technology by a Polluting Monopoly," ES: Economics for Sustainability 291524, Fondazione Eni Enrico Mattei (FEEM) > ES: Economics for Sustainability.
    2. Corinne Langinier & Amrita Ray Chaudhuri, 2020. "Green Technology and Patents in the Presence of Green Consumers," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(1), pages 73-101.
    3. Lambertini, Luca & Poyago-Theotoky, Joanna & Tampieri, Alessandro, 2017. "Cournot competition and “green” innovation: An inverted-U relationship," Energy Economics, Elsevier, vol. 68(C), pages 116-123.
    4. Langinier, Corinne & Ray Chaudhuri, Amrita, 2024. "Green Patents in an Oligopolistic Market with Green Consumers," Working Papers 2024-7, University of Alberta, Department of Economics.
    5. Moner-Colonques, R. & Rubio, S., 2015. "The timing of environmental policy in a duopolistic market," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 15(01).
    6. Wen, Wen & Zhou, P. & Zhang, Fuqiang, 2018. "Carbon emissions abatement: Emissions trading vs consumer awareness," Energy Economics, Elsevier, vol. 76(C), pages 34-47.
    7. Christos Constantatos & Christos Pargianas & Eftichios S. Sartzetakis, 2021. "Green consumers and environmental policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 105-140, February.
    8. Wenjun Sun & Naoto Jinji, 2014. "The Effects of Emission Taxes on Pollution through the Diffusion of Clean Technology:The Presence of Green Consumers," Discussion papers e-14-014, Graduate School of Economics Project Center, Kyoto University.
    9. Jason M. Walter, 2018. "Understanding the dynamics of clean technology: implications for policy and industry," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 365-386, April.
    10. Dongdong Li, 2022. "Dynamic optimal control of firms' green innovation investment and pricing strategies with environmental awareness and emission tax," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 920-932, June.
    11. Pang, Yu, 2018. "Profitable pollution abatement? A worker productivity perspective," Resource and Energy Economics, Elsevier, vol. 52(C), pages 33-49.
    12. Zhang, Wenjie & He, Lingling & Yuan, Hongping, 2022. "Enterprises’ decisions on adopting low-carbon technology by considering consumer perception disparity," Technovation, Elsevier, vol. 117(C).
    13. Guo, Jian-Xin & Zhu, Kaiwei, 2021. "Implications for enterprise to adopt cleaner technology: From the perspective of energy market and commodity market," Research in International Business and Finance, Elsevier, vol. 57(C).
    14. Abdulla, Eman & Lim, King Yoong & Morris, Diego & Saliba, Faten, 2022. "Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence," The Warwick Economics Research Paper Series (TWERPS) 1429, University of Warwick, Department of Economics.
    15. Manman Wang & Shuai Lian & Shi Yin & Hengmin Dong, 2020. "A Three-Player Game Model for Promoting the Diffusion of Green Technology in Manufacturing Enterprises from the Perspective of Supply and Demand," Mathematics, MDPI, vol. 8(9), pages 1-26, September.
    16. Jinhuan Tang & Shoufeng Ji & Liwen Jiang, 2016. "The Design of a Sustainable Location-Routing-Inventory Model Considering Consumer Environmental Behavior," Sustainability, MDPI, vol. 8(3), pages 1-20, February.
    17. Lim, King Yoong, 2024. "Heterogeneous environmental consciousness, carbon permit adoption, and endogenous growth: A case of China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 734-751.
    18. Gongbing Bi & Minyue Jin & Liuyi Ling & Feng Yang, 2017. "Environmental subsidy and the choice of green technology in the presence of green consumers," Annals of Operations Research, Springer, vol. 255(1), pages 547-568, August.

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    More about this item

    Keywords

    Environmentally Conscious Consumers; Technology Choice; Environmental Taxation;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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