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Article
Environmental Ethics, Financial Performance and Carbon Pricing.pdf
Working Paper
(2024)
Abstract
We model the firm's objective as a function of output and environmental ethics. The cost of emission increases with production and is weighted by firms’ environmental ethics, leading firms to endogenize the optimal emission-output level. Firms with higher environmental ethics have higher marginal financial output and emit less because of the higher emission cost. More importantly, we argue that the one-size-fits-all carbon pricing is not optimal. Instead, carbon emissions should be priced based on the efficiency of the emission. Given a fixed carbon cap, switching to efficiency-based carbon pricing increases social welfare. Using emission data from 1995 to 2020, we provide empirical evidence to support the theory.
Keywords
- Carbon pricing,
- financial performance,
- environmental ethics,
- social welfare
Disciplines
Publication Date
Spring April 1, 2024
Citation Information
Shuang Wu, Stefano Bonini and Meghana Vaidya. "Environmental Ethics, Financial Performance and Carbon Pricing.pdf" Working Paper (2024) Available at: http://works.bepress.com/shuang-wu1/3/