Demand for ethical commodities and firms' profitability

Literature on ethical consumerism is abound with evidence of growing preferences of consumers towards consuming ethical, greener, and pro-social commodities. It is further fueled by initiatives taken by the governments to tackle pressing ecological concerns and campaigns for social justice, and human rights, etc. Moreover, ethical companies are also seen to be profitable over their competitors. In this study we present a model of ethical demand subject to the level of wealth a consumer owns and then derive conditions under which an ethical firm can be more profitable in a general equilibrium.