A Generalized Impure Public Good and Linear Characteristics Model of Green Consumption

This paper provides a general framework for understanding consumer behavior related to goods and services that may be considered environmentally friendly, ethically produced, fairly traded, or some combination thereof. This paper generalizes the impure public good model and derives its comparative static properties. The model accounts for any number of impure public (green) goods and joint production of any number of both private and public characteristics. The generalization provides a bridge between the impure public good model and the well-known linear characteristics model, both of which are special cases of the model developed here. The results show how demand for green goods and characteristics such as environmental quality depends on wealth, exogenously given levels of public goods, and the technologies of joint production. The e¤ects of changes in technology depend critically on whether jointly produced characteristics are complements or substitutes in consumption. Several of the results are rather counterintuitive and di¤er in meaningful ways from existing models of impure public goods and linear characteristics. The results also illuminate several reasons for greater caution about whether it is reasonable to assume that green goods and services are necessarily bene…cial for the provision of public goods.