Work

The effects of taxes and subsidies on environmental qualities in a differentiated duopoly

Year: 2021

Type: article

Abstract: In a horizontally differentiated duopoly, a green attribute (environmental quality) can be added to the products. Average green quality generates a positive externality entering the Government’s objective function (and possibly consumers’ utility). A tax on the “dirtiest” product decreases its environmental quality but it increases that of the cleaner rival enough to imply an average quality increase, achieving environmental protection. The same holds for a subsidy to production targeted to the cleanest producer. A generic quality-related subsidy also increases the positive externality, increases profits of the greenest and lowers those of the dirtiest producer. Education campaigns by the Government also increase average green quality.

Source: Letters in Spatial and Resource Sciences

DOI: 10.1007/s12076-021-00272-7

Author: Paolo G. Garella

Institution: University of Milan

Language: English

Topic: Environmental Sustainability in Business

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Responsible consumption and production

Open Access status: hybrid

Estimated APC paid: $2,780