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- Title
Entry Facilitation by Environmental Groups.
- Authors
van der Made, Allard; Schoonbeek, Lambert
- Abstract
We consider a model of vertical product differentiation where consumers care about the environmental damage their consumption causes. An environmental group is capable of increasing consumers’ environmental concern via a costly campaign. We show that the prospect of such a campaign can induce entry by a firm that is able to employ a cleaner technology than the one used by the incumbent. We further demonstrate that the subsequent competition can lead to an adverse effect on aggregate pollution, i.e. the decline in average industry pollution per product is offset by the increase in aggregate production.
- Subjects
GREEN movement; PRODUCT differentiation; CONSUMERS; ECONOMIC competition; ENVIRONMENTAL impact analysis; VERTICAL integration; GREEN technology
- Publication
Environmental & Resource Economics, 2009, Vol 43, Issue 4, p457
- ISSN
0924-6460
- Publication type
Article
- DOI
10.1007/s10640-008-9239-3