Dpt Economics

We model competition in an emissions trading system (ETS) as a game between two \u85rms and environmental group. In a previous stage, \u85 rms endogenously choose their manufacturing technologies. Our results show that there is a U-shape relationship between how polluting the chosen technology is and the degree of the environmen-talistsimpure altruism. Firms choose a more polluting technology in the presence of the environmentalists than in their absence if they are characterised by high enough degrees of impure altruism