FEEM working papers "Note di lavoro" series
2020 .31

Is Environmentalism the Right Strategy to Decarbonize the World?


Authors: Marco A. Marini, Ornella Tarola, Jacques-François Thisse
Series: 2030 Agenda
Editor: Sergio Vergalli
Keywords: Environmentalism, Psychic Costs and Benefits, Vertical Product Differentiation, Environmental Policy
JEL n.: D11, L13, Q50

Abstract

We study how the supply of environmentalism, which is defi…ned by psychic benefi…ts (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 fi…rms with more market power which they use to maximize profi…ts. 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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Suggested citation: Marini, M. A., C. Tarola, J.-F. Thisse, (2020), 'Is Environmentalism the Right Strategy to Decarbonize the World ?', Nota di Lavoro 31.2020, Milano, Italy: Fondazione Eni Enrico Mattei


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