Conference Agenda

Consumers increasingly care about the environmental quality of the goods they consume. However, limited attention impairs consumers’ ability to compare and evaluate the environmental quality of the goods. In this article, I highlight the importance of accounting for consumers’ limited attention: I show that consumers’ limited attention affects firms’ investments in environment quality and the effectiveness of policy interventions. Environmental quality, consumer surplus, producer surplus, and welfare are non-monotonic functions of attention. Average environmental quality, consumer surplus, producer surplus, and welfare are highest under intermediate (but different) levels of attention. In addition, limited attention influences the effectiveness of policy interventions. I identify conditions under which emission taxes, information campaigns, and mandatory disclosure lead to less investments in environmental quality, more emissions, or lower welfare. Only subsidies that reduce investment costs have no negative effects.

We develop a theoretical framework to investigate the impact of patent policies and emission taxes on green innovation that reduces the emission-output ratio and on the emission level. We allow for strategic interactions of firms in a duopolistic market in the presence of green-conscious consumers. A key finding is that the greater the proportion of green-conscious consumers, the less likely firms are to license green innovation, which results in higher emissions levels. Therefore, policymakers may consider implementing technology standards to force licensing. Increasing the emission tax beyond a certain threshold induces licensing in equilibrium for sufficiently large proportions of green-conscious consumers, thereby causing emissions to fall discretely. Finally, we find that there exists a second threshold level of the tax beyond which increasing the emission tax leads to increasing the emission level. This paradox can be mitigated by decreasing patenting costs and/or making the patentability requirement stricter.

This study presents a randomized controlled trial in Switzerland to investigate

the effect of a non-monetary intervention on transport choices. A GPS-based tracking

app records the movements of 777 participants for several months, and automatically

detects their travel modes. The treatment consists in sending “personal mobility

reports” to a randomly selected subgroup. These reports contain personalized descriptive

and prescriptive information about participants’ external costs of transport. This

treatment reduces the climate-related external costs by 5.7%, but has no effect on external

costs related to health and congestion. A heterogeneity analysis reveals varying

treatment effects among different socio-demographic subgroups. Reports with positive

feedback lead to further reductions in external costs, whereas negative feedback has

a boomerang effect in the sense that participants increase their external costs. Based

on participants’ travel response and their willingness to pay for future reports, we

compute average welfare gains of 2.25 Swiss francs per participant and report from a

targeted intervention.

Tax aversion often hinders the implementation of Pigouvian policies. As an alternative, authorities use information campaigns to induce prosocial behaviors. In this paper, I analyze how they should be optimally designed. I develop a model where, in addition to material consumption, moral agents derive utility from their self-image, which is determined by the distance between their actual consumption and their perception of the ideal consumption of a dirty good. To regulate externalities, the regulator can implement a tax or an information campaign to modify agents' perception of the ideal behavior. Two types of agents emerge from the model: (i) those who are averse of being too far away from their ideal and value the first efforts to get closer are the self-forgiving, and (ii) those who are averse not behaving exactly as their ideal are the self-demanding. I show that a lower perceived ideal reduces consumption of the dirty good for self-forgiving agents while it increases it for strongly self-demanding agents through a discouragement effect. I then study optimal information campaigns, especially when taxes are inefficiently low. I find that their design crucially depends on the type of agent, the level of the tax, and whether the regulator pursues moral or material efficiency.