Global Warming with Green and Brown Consumers

Abstract

In this paper, I investigate how much green polluters mitigate the familiar dynamic “tragedy of the commons” (“global warming”). Green consumers feel penalized (“pain”) for any consumption in excess of the social optimum; this can arise, for example, from Kant’s categorical moral imperative. Interplays among and between green and brown consumers are investigated as differential games. Green preferences, the heterogeneity of consumers, and the irreversibility of emissions lead to discontinuous strategies. Associated with these are a number of non-trivial and even puzzling features (e.g., the possibility of another “green paradox”).