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INFORMATION Chapter Ten: The Economics of Green Business READ HERE

I have read many environmental economics texts and while they drone on about cost/benefit analysis and introduce countless acronyms such as CAA and EPA and BTU, they don't discuss why some capitalist firms sell green varieties such as a Prius.  Chapter Ten of my new book tackles this subject.

The chapter starts by quoting a famous Milton Friedman piece on his views on corporate responsibility and the "double bottom line".  He makes a strong case that firms should focus on their core business and then distribute their profits to their shareholders and allow them to make any green contributions they seek fit.  He argues that the business of business is business.

But, we do see more and more companies engaging in Double Bottom Line activities. Ben and Jerry's isn't alone.  Why do such companies pursue this strategy? Is this product differentiation?  Is this due to the CEOs using other people's money to pursue their own agenda?  Is this to attract and retain righteous talented young workers who want to work for a progressive company?  In Chapter 10, I discuss each of these factors.
Not bad for a $2 book?

The chapter then goes on and discussed the incentives for businesses to "go green" with and without a government's nudge. I present a model of product differentiation with no government involvement to sketch the case of what factors determine whether a for profit firm "goes green".   I then introduce government and the nudges that a liberal/environmentalist government can and will introduce to encourage companies to produce green products. In the absence of a carbon tax, this is the "theory of the second best" at work. I discuss Tesla.

The chapter ends with a discussion about endogenous innovation and how the growth of an upper class environmental cohort (think of Berkeley) can accelerate the introduction of new green varieties of products.
Intuitively, demand creates supply. If I'm the only bald guy in the world, no for profit firm will pay the risk upfront research costs to create a solution to my problem. If there are a billion bald guys, firms will jump in to create the wonder drug.  The same intuition holds for the birth of green products.

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