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Environmental Concerns, Environmental Policy and Green Investment

Environmental regulators often use environmental policy to induce green investment by firms. However, if an environmental policy fails to exert a long-run effect on regulating the economic agents’ behavior, it may be more reasonable to think of the firm as the leader in the game, since the investmen...

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Detalles Bibliográficos
Autores principales: Gao, Xuexian, Zheng, Haidong
Formato: Online Artículo Texto
Lenguaje:English
Publicado: MDPI 2017
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5750988/
https://www.ncbi.nlm.nih.gov/pubmed/29236072
http://dx.doi.org/10.3390/ijerph14121570
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author Gao, Xuexian
Zheng, Haidong
author_facet Gao, Xuexian
Zheng, Haidong
author_sort Gao, Xuexian
collection PubMed
description Environmental regulators often use environmental policy to induce green investment by firms. However, if an environmental policy fails to exert a long-run effect on regulating the economic agents’ behavior, it may be more reasonable to think of the firm as the leader in the game, since the investment in green technology is usually a strategic decision. In this paper, we consider a three-stage Stackelberg game to address the interaction between a profit-maximizing firm (Stackelberg leader) facing emission-dependent demand, and the environmental regulator (Stackelberg follower). The firm decides on the green technology level in the first stage of the game based on its understanding of the regulator’s profits function, especially an environmental concern that is introduced as an exogenous variable. In the current research, we show that high levels of the regulator’s environmental concerns do not necessarily lead to the choice of green technology by the firm, and green investment level depends on the combined effects of the market and operational factors for a given level of the regulator’s environmental concerns. The result also shows that increasing environmental awareness amongst the consumers is an effective way to drive the firm’s green investment.
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spelling pubmed-57509882018-01-10 Environmental Concerns, Environmental Policy and Green Investment Gao, Xuexian Zheng, Haidong Int J Environ Res Public Health Article Environmental regulators often use environmental policy to induce green investment by firms. However, if an environmental policy fails to exert a long-run effect on regulating the economic agents’ behavior, it may be more reasonable to think of the firm as the leader in the game, since the investment in green technology is usually a strategic decision. In this paper, we consider a three-stage Stackelberg game to address the interaction between a profit-maximizing firm (Stackelberg leader) facing emission-dependent demand, and the environmental regulator (Stackelberg follower). The firm decides on the green technology level in the first stage of the game based on its understanding of the regulator’s profits function, especially an environmental concern that is introduced as an exogenous variable. In the current research, we show that high levels of the regulator’s environmental concerns do not necessarily lead to the choice of green technology by the firm, and green investment level depends on the combined effects of the market and operational factors for a given level of the regulator’s environmental concerns. The result also shows that increasing environmental awareness amongst the consumers is an effective way to drive the firm’s green investment. MDPI 2017-12-13 2017-12 /pmc/articles/PMC5750988/ /pubmed/29236072 http://dx.doi.org/10.3390/ijerph14121570 Text en © 2017 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
spellingShingle Article
Gao, Xuexian
Zheng, Haidong
Environmental Concerns, Environmental Policy and Green Investment
title Environmental Concerns, Environmental Policy and Green Investment
title_full Environmental Concerns, Environmental Policy and Green Investment
title_fullStr Environmental Concerns, Environmental Policy and Green Investment
title_full_unstemmed Environmental Concerns, Environmental Policy and Green Investment
title_short Environmental Concerns, Environmental Policy and Green Investment
title_sort environmental concerns, environmental policy and green investment
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5750988/
https://www.ncbi.nlm.nih.gov/pubmed/29236072
http://dx.doi.org/10.3390/ijerph14121570
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