Impact of subsidy policies on green products with consideration of consumer behaviors: Subsidy for firms or consumers?
Journal
Resources, Conservation and Recycling
Journal Volume
173
Date Issued
2021
Author(s)
Abstract
The subsidy policies have been being implemented as one of the instruments to leverage the uptake level of green products or technologies. However, the fact shows that the occupation level of such products or technologies is still far below expectations. In this study, we investigate two subsidy policies and their impacts on a market that comprises two vertically differentiated products: green and less green products. We consider two subsidy policies, namely, subsidy for firm and subsidy for consumer policies. Under the subsidy for firm policy, a regulator subsidizes the firm who produces greener products while under subsidy for consumer policy, the regulator subsidizes the consumers who buy greener products. We set the scope on consumers who exhibit the same characteristics such as preferences and green awareness level. We incorporate the reference-dependent preferences theory to derive consumers’ decisions on buying the green or less green products under the influence of each subsidy. Given our specific framework, the counter-intuitive theoretical result shows that subsidy for firm policy is capable to induce a higher level of the adoption of green products than subsidy for consumer policy. ? 2021
Subjects
adoption; article; awareness; consumer attitude; endowment effect; human
Other Subjects
Differentiated products; Firm policies; Green products; Green technology; Loss-aversion; Preference theory; Reference-dependent preference; Subsidy policy; Consumer behavior; consumption behavior; policy implementation; subsidy system; adoption; article; awareness; consumer attitude; endowment effect; human
Type
journal article