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Clean technology, willingness to pay and market size

Nabin, Munirul H. and Sgro, Pasquale M. 2010, Clean technology, willingness to pay and market size, Asia-Pacific journal of accounting & economics, vol. 17, no. 2, pp. 193-210.

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Title Clean technology, willingness to pay and market size
Author(s) Nabin, Munirul H.
Sgro, Pasquale M.
Journal name Asia-Pacific journal of accounting & economics
Volume number 17
Issue number 2
Start page 193
End page 210
Total pages 8
Publisher City University of Hong Kong
Place of publication Kowloon, Hong Kong
Publication date 2010-08
ISSN 1608-1625
Keyword(s) clean technology
willingness to pay
coordination failure
Summary This paper extends Salop’s model of localized competition by introducing the consumers’ willingness to pay (WTP) for clean products and allows an individual firm to choose between a clean or a dirty technology. We assume that a clean technology is relatively costly to adopt. The consumer is willing to pay more for a product produced with clean technology and the model can also be interpreted as a world economy model where each firm represents a country. There exists a critical value of m (proportion of firms adopting the clean technology), m*, such that if m < m* then no country adopts the clean technology, all countries adopt the clean technology only if m > m* while some countries will adopt the clean technology and some will not adopt the clean technology if m = m*. Our results also identify an example of coordination failure. Since symmetric technology adoption delivers the same level of profits as non-adoption, global coordination will be necessary to achieve the clean technology adoption outcome. Finally, we demonstrate that the
private and public (social planner) incentives to adopt clean technology differ.
Notes
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Language eng
Field of Research 140299 Applied Economics not elsewhere classified
Socio Economic Objective 970114 Expanding Knowledge in Economics
HERDC Research category C1 Refereed article in a scholarly journal
HERDC collection year 2010
Copyright notice ©2010, City University of Hong Kong
Persistent URL http://hdl.handle.net/10536/DRO/DU:30029943

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