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Int. J. Environ. Res. Public Health 2017, 14(12), 1570; doi:10.3390/ijerph14121570

Environmental Concerns, Environmental Policy and Green Investment

School of Economics & Management, China University of Petroleum (East China), Qingdao 266580, China
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Received: 1 November 2017 / Revised: 9 December 2017 / Accepted: 11 December 2017 / Published: 13 December 2017
(This article belongs to the Special Issue Decision Models in Green Growth and Sustainable Development)
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Abstract

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. View Full-Text
Keywords: green technology; green investment; environmental concern; environmental tax; low-emission green technology; green investment; environmental concern; environmental tax; low-emission
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Gao, X.; Zheng, H. Environmental Concerns, Environmental Policy and Green Investment. Int. J. Environ. Res. Public Health 2017, 14, 1570.

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