In this paper, we show that the participation by an environmental group in a permit market does not necessarily result in more investment in abatement or even less pollution. There is a U-shaped relationship between the emission per unit of output and the extra weight given by the environmental...

We model a market with environmentally conscious consumers and a duopoly in which firms consider the adoption of a clean technology. We show that as pollution increases, consumers shift more resources to the environmental activities, thereby affecting negatively the demand faced by the duopoly....