PUB - Publikationen an der Universität Bielefeld

We analyse the optimal consumption of a clean and a dirty consumption good, taking an interdisciplinary perspective. Thus, we posit that individuals follow economic rationality when determining consumption but, on the other hand, we take into account findings from social psychology as regards human behaviour by allowing for the formation of behavioural routines as a result of consuming the polluting good. We show under which conditions routine formation raises the consumption of the clean good relative to the dirty one in the competitive economy and we demonstrate when the formation of routines generates a lower steady-state pollution stock compared to the situation without routines. Finally, we determine the Pigou tax rates and we illustrate that the social optimum may imply a higher steady-state pollution than the competitive economy if the effect of routine formation is sufficiently strong.