Politická ekonomie 2023, 71(1):89-103 | DOI: 10.18267/j.polek.1368

Induced vs. Voluntary Green Production: Which Is Better for Society?

Domenico Buccella ORCID...a, Augustine Abakpa ORCID...b
a Department of Economics, Kozminski University, Warsaw, Poland
b Justice Development and Peace Commission (JDPC)/CARITAS Nigeria, Jimeta-Yola, Nigeria

This article studies the environmental and societal impacts of a polluting monopoly when a society strives for a clean environment. Two scenarios are considered: (1) the government levies an environmental tax to induce investment in emission-reducing technology, and (2) the monopolist engages in environmental corporate social responsibility (CSR). It is shown that taxation has a lower environmental impact, but the monopolist undertakes CSR activities only if the abatement technology is efficient. Social welfare is always higher under CSR; therefore, when the technology is not adequately efficient, the government should implement a second-best environmental tax policy to avoid the worst welfare outcome.

Keywords: Green production, abatement, environmental tax, environmental corporate social responsibility
JEL classification: H23, L1, M5

Received: November 25, 2021; Revised: April 19, 2022; Accepted: July 1, 2022; Published: February 25, 2023  Show citation

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Buccella, D., & Abakpa, A. (2023). Induced vs. Voluntary Green Production: Which Is Better for Society? Politická ekonomie, 71(1), 89-103. doi: 10.18267/j.polek.1368
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