On September 18–19, 2025, the BEYOND Project took part in the XXXVII Annual Conference of the Italian Society of Public Economics (SIEP), held in Naples.
Prof. Luca Spataro, Scientific Coordinator of BEYOND and Professor at the University of Pisa, presented the paper “Breaking the Efficiency–Environment Trade-off: The Role of Fiscal Policies, Market Power, and Responsible Consumers”, co-authored with Prof. Thomas I. Renström.
The research addresses one of today’s most pressing economic challenges: how to balance growth and environmental quality.
Building on a dynamic Cournot framework with endogenous firm entry, the study analyzes how fiscal instruments, market competition, and socially responsible (SR) consumers interact to shape both economic and environmental outcomes.
Key Insights from the study:
- Responsible consumers matter: When consumers value sustainability, firms have incentives to reduce emissions even without cutting production. In economies with advanced abatement technologies, this leads to a virtuous cycle of cleaner growth—higher investment, output, and profits, alongside lower pollution.
- Fiscal design is crucial: Among policy tools, abatement subsidies consistently reduce emissions and boost output, though they may raise prices. Pollution taxes and investment subsidies can also be effective, particularly when green technologies are efficient.
- Competition has two faces: Greater market contestability lowers prices but may worsen environmental quality if firms reduce abatement efforts. Hence, competition must be complemented by targeted fiscal measures.
- New trade-offs emerge: Policies that improve sustainability may increase market concentration and prices, shifting the balance between sustainability and competition.
The study’s overarching message is that economic and environmental objectives can be aligned—but only through well-calibrated policy instruments that account for consumer values, market power, and technological maturity.
By highlighting the role of fiscal design and individual responsibility, this work directly resonates with BEYOND’s mission: empowering young generations to drive sustainable transformation through awareness, education, and evidence-based policy.
You can find the slides here: