Font Size: 

This work addresses the need by identifying alternatives to bans and taxes in order to promote the formation of environmentally friendly social norms. We focus on the program for plastic shopping bag reduction, especially stores’ reusable bag reward programs. By considering the bandwagon effects of green program participation, this study searches for the economic motivation for stores’ voluntary rewards program, identifies optimal reward programs and assesses the effectiveness of reward programs in encouraging consumers to exhibit environmentally friendly behavior in the long-run. Finally, this research characterizes the behavior of stores and consumers, as well as the economic environments in which they operate, for the broader application of the model.Results of this study show that rewards are effective for controlling plastic bag use, since the number of reusable bag users increases after a reward is put in place. We also find the threshold that guarantees consumers keeping using reusable bags even without reward programs. In addition, results show that the winning store attracting more consumers participating will increase store profits.

Environmental economics; Industry Organization