I'm trying to make a model which is build around the idea of carbon offsetting fuel (the consumer pays an extra fee per litre fuel for the compensation of the emitted CO2). The goal here is to make a model which takes the following into account:
- it maximizes utility
- it has a budget constraint
- it has an demand for kilometres driven (which gives positive utility) --> travel demand
- these kilometres driven however also emit CO2 which the consumer is aware of and dislikes (the consumer experiences negative utility from emitting CO2
- there is a demand for compensation (the consumer doesn't recieve negative utility from driving if it compensates. However the consumer has to pay more for the same km driven).
- optional: the consumer can also consider taking public transportation (which is consider as an non polluting means of travel, however this is less comfortable than driving in your own car.
i've already tried different options, but i can't seem to get my demands for driving and compensated driving to make completely sense. I hope there is someone here who can help me with this problem