Environmental and Resource Economics

, Volume 40, Issue 2, pp 195–215 | Cite as

Conservation: From Voluntary Restraint to a Voluntary Price Premium



This paper investigates how concern for the environment translates into predictable patterns of consumer behavior. Two types of behavior are considered. First, individuals who care about environmental quality may voluntarily restrain their consumption of goods and services that generate a negative externality. Second, individuals may choose to pay a price premium for goods and services that are more environmentally benign. A theoretical model identifies a symmetry between such voluntary restraint and a voluntary price premium that mirrors the symmetry between environmental policies based on either quantities (quotas) or prices (taxes). We test predictions of the model in an empirical study of household electricity consumption with introduction of a price-premium, green-electricity program. We find evidence of voluntary restraint and its relation to a voluntary price premium. The empirical results are consistent with the theoretical model of voluntary conservation.


Conservation behavior Electricity demand Renewable energy 

JEL Classifications

D1 Q4 Q5 


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Copyright information

© Springer Science+Business Media B.V. 2007

Authors and Affiliations

  1. 1.Bren School of Environmental Science & Management and Department of EconomicsUniversity of CaliforniaSanta BarbaraUSA
  2. 2.National Bureau of Economic ResearchCambridgeUSA
  3. 3.School of Natural Resources & EnvironmentUniversity of MichiganAnn ArborUSA

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