Discussion paper

DP15355 Is Environmentalism the Right Strategy to Decarbonize the World?

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 products and the ensuing consequences for the global level of pollution. Contrary to general belief, a high supply of environmentalism does not give rise to a better environmental outcome because it endows firms with more market power which they use to maximize profits. By contrast, standard policy instruments such as a minimum quality standard or the use of greener technologies leads to a better ecological footprint.

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Citation

Marini, M, O Tarola and J Thisse (eds) (2020), “DP15355 Is Environmentalism the Right Strategy to Decarbonize the World?”, CEPR Press Discussion Paper No. 15355. https://new.cepr.org/publications/dp15355