Introducing a "green" good: Implications for environmental quality and social welfare

This paper investigates the effects on environmental quality and social welfare if an environmentally friendly - or "green" - good is introduced on a market. The green good has been modeled as an impure public good such that its jointly produced characteristics are both available separately in terms of a private consumption good and donations to an environmental organization as a pure public good. The situations before and after the launch of the green good are quantified explicitly. Conclusions on environmental quality are drawn in terms of an Index of Easy Riding, and the social welfare gap is measured as an equivalent variation.