Posted by: Ian Bruk | November 29, 2006

Innovation Around Global Warming

Jon Udell is one of my favourite bloggers. Here’s an excerpt from his blog:

Imagine a future version of Amazon.com where the price for each product is reported in two different ways: as dollars (P1), and also as carbon-adjusted dollars (P2). Now consider a pair of competing products, A and B, under two different scenarios. In one scenario, A’s P2 is lower than B’s, but A’s P1 is higher than B’s. Some people will be willing to pay the higher P1 (i.e., more dollars) to reward A’s lower P2 (i.e., less environmental impact), but most won’t.

In the other scenario, however, A’s P2 is still lower than B’s, but its P1 is about the same. In other words, there’s no penalty to the buyer for rewarding A’s lower environmental impact. If the P2 data are available, it’s a rational choice.

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