Environmental groups in monopolistic markets

Pim Heijnen*, Lambert Schoonbeek

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

10 Citations (Scopus)

Abstract

We examine a market in which a monopolistic firm supplies a good. The production of the good causes damage to the environment. Consumers are heterogeneous with respect to their disutility of the environmental damage. An environmental group can enter the market and set up a campaign in order to influence consumers' preferences. We characterize the equilibrium of the resulting entry-deterrence game and investigate its properties. It turns out that the aggregated environmental damage is lowest if the firm is able to deter entry of the environmental group and, moreover, the fixed entry cost of the environmental group is small enough.

Original languageEnglish
Pages (from-to)379-396
Number of pages18
JournalEnvironmental & Resource Economics
Volume39
Issue number4
DOIs
Publication statusPublished - Apr-2008

Keywords

  • environmental group
  • environmental quality
  • monopolist
  • entry deterrence
  • PRODUCT DIFFERENTIATION
  • ADVERTISING SIGNALS
  • CONSUMERS
  • WELFARE
  • PRICE
  • MODEL

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