Torben Klarl
Consumer's Environmental Awareness and the Role of
(Green) Entrepreneurship:
Lessons from Environmental Quality Competition and R&D
Activities for Environmental Policy
Abstract:
In the recent last years, in particular in the aftermath of the global
financial and economic crisis, many countries initiated economic
recovery plans with a major focus on stimulating green entrepreneurial
activities to revive economic growth. Further, the recovery plans
intend to improve a country's awareness for a direct orientation
towards (strong) sustainability and green growth.
Before discussing strategies towards green growth, in this paper we
propose a novel framework to increase our understanding of the
interplay of process R&D activities, the strategic price and
environmental quality setting of heterogeneous entrepreneurs in a
market where consumers feel up to paying for environmental quality
improvement of a vertically differentiated good.
In the paper we decompose an entrepreneur's incentive conducting
process R&D in four parts. In particular we show that an
entrepreneur's incentive of conducting own process R&D is
reduced due to the existence of knowledge-spillovers. Moreover, due to
the strategic complementarities, both in prices as well as in
environmental quality, a strategic effect reinforces the negative
consequences of the spillover-effect. We show that the externalities in
the model require corrections based upon a mixture of fiscal policies
and a process R&D subvention scheme establishing a first-best
solution. We further thoroughly discuss the implementation of a
second-best solution and derive environmental policy implications.
JEL: Q55, Q58, O31, O33, D43, L13, L15
Paper:
Paper available as pdf-file.
Beitrag Nr. 321, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Torben
Klarl, University of Augsburg, Department of Economics,
D-86135
Augsburg,
Germany, phone +49-821-598-4189, fax +49-821-598-4231
email: torben.alexander.klarl@wiwi.uni-augsburg.de
Bo., 22.01.2013