Document Type

Article

Publication Version

Accepted Manuscript

Publication Date

12-2014

Journal or Book Title

Journal of Cleaner Production

Volume

85

Issue

December

First Page

94

Last Page

103

DOI

10.1016/j.jclepro.2014.01.016

Abstract

As public concerns on sustainable economic development increase, an increasing number of manufactured products have found their environmentally preferable alternatives. In this study, we propose an oligopoly game theoretical model to analyze the competition between the green and ordinary manufacturing sectors. We identify cost efficiency and innovative design as key elements to the survival of green products. We also find that the effectiveness of Pigouvian tax and subsidy policies depend on product characteristics, market structures, as well as targeted results. Our small empirical examples on Corolla vs. Prius and Incandescent lamp vs. Compact fluorescent lamp (CFL) show that our modeling results are more optimistic than real market statistics. We identify pre-equilibrium market dynamics, consumer bias towards green products, and modeling limitations as the main reasons for such differences. We also investigate the market competition and total societal welfare in the presence of tax and subsidy policy intervention. The study results not only provide guidelines and managerial insights for green producers to understand the underlying factors that determine the competitiveness of green products in the market but also benefit policy makers by quantitatively showing the effectiveness of tax and subsidy policies in promoting green products.

Comments

NOTICE: This is the author’s version of a work that was accepted for publication in Journal of Cleaner Production. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Cleaner Production, 85, December (2014), doi: 10.1016/j.jclepro.2014.01.016.

Copyright Owner

Elsevier

Language

en

File Format

application/pdf

Published Version

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