Sustainability ratings help consumers understand the environmental impact of their purchases. Such ratings have increased the consumers' sustainable choices in the electrodomestics and housing markets. In the particular case of energy labels, sustainable products are also associated with private...

To reduce a negative externality, socially responsible households can invest responsibly (SRI), consume responsibly (SRC), or do both. Which is better? In a closed microeconomic model with intertwined product and capital markets, we analyze how responsible households should use SRI and SRC to...