The Invisible Green Hand: How Individual Decisions and Markets Can Reduce Greenhouse Gas Emissions

by Nalin Kulatilaka, Martha Amram



The cumulative effects of individual purchase decisions are responsible for anthropogenic climate change. These very same private investment and consumption decisions are at the center of climate change mitigation efforts. This article shows that new market-based, incentive-compatible mechanisms could encourage win-win (green and profitable) behavior by private investors. Despite their availability and financial viability, people often overlook more efficient technologies in favor of the less efficient but familiar ones. The article provides a framework that shows how local policies can act as catalysts in providing profitable opportunities for private investors to bridge this so-called "efficiency gap."

California Management Review

Berkeley-Haas's Premier Management Journal

Published at Berkeley Haas for more than sixty years, California Management Review seeks to share knowledge that challenges convention and shows a better way of doing business.

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