Green consumerism and collective action

We analyze the effect of collective action vs green/environmentally aware consumers onambient environmental quality and market equilibrium. We consider a model with twotypes of consumers who differ in their willingness-to-pay for a good available in twodifferent environmental qualities, and two competing firms: one selling the good of highenvironmental quality and the other of low environmental quality. We show that collectiveaction by green consumers reduces competition and leads to higher prices for the good ofboth qualities. Though it improves the ambient environmental quality, it may reduce thewelfare of both types of consumers....