When does eco-efficiency rebound or backfire? An analytical model

It is known that an eco-efficiency strategy, which saves resources in the production process, may be offset by a rebound effect; it may even backfire. Less known are the exact conditions under which ecoefficiency rebounds or backfires. This article fills the gap by providing an analytical model of the rebound and backfire effects. We propose an optimal control framework of dynamic pricing and eco-efficiency investment, for which eco-efficiency reduces the unit production cost and boosts the demand of environmentally concerned consumers. Results, which hold with a general demand formulation, examine the analytic conditions for the rebound and backfire effects. They also highlight the possibility of a reverse rebound effect. Such results pave the way to sounder sustainability strategies. (C) 2020 Elsevier B.V. All rights reserved.

Automated summary

This article presents an analytical model of the rebound and backfire effects of eco-efficiency in a dynamic pricing and investment framework. It examines the impact of eco-efficiency on unit production costs and demand from environmentally concerned consumers, analyzing conditions for rebound and backfire effects with the possibility of a reverse rebound effect for sounder sustainability strategies.