Environmental Policy under Some Asymmetric Social-Economical Factors

Abstract

Abstract:We consider situations where some social-economical factors, such as environmental awareness and other factors promoting greener environment, not only affects market demand and output, but also affects firm's green innovative tendencies. This paper shows that if these social-economical factors are strong enough to move the market demand toward environmental friendliness, firm's strategies might shift toward greener technology or environmental friendlier practices. If these effects on demand for greener environment are large enough, stringent environmental policy would induce more firms to produce more.