EconPapers    
Economics at your fingertips  
 

Product Innovation in Response to Environmental Standards and Competitive Advantage: A Hedonic Analysis of Refrigerators in the Japanese Retail Market

Kimitaka Nishitani and Munehiko Itoh

No DP2014-30, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: The purpose of this study is to analyze whether a manufacturer's product innovation in response to environmental standards produces a competitive advantage, as the Porter hypothesis suggests. If a product with environmentally friendly attributes that are innovated in response to environmental standards is preferred in the market, the product can receive a price premium for its attributes. The main findings from our hedonic price regression for refrigerators, using Japanese retail market data during the period 1998–2012, are as follows. First, the attribute-adjusted refrigerator price has decreased drastically in last 15 years, which implies that the fundamental value of "refrigerating" has been commoditized. Second, price premiums are found for products that have been innovated in response to environmental standards to be chlorofluorocarbon (CFC)-free and use energy more efficiently. Third, the price premiums for these attributes show specific trends during this period. A CFC-free product initially received a high price premium; however, the premium decreased and became 0. On the other hand, although an energy-consumption-efficient product did not receive a high price premium initially, the price premium increased every time manufacturers faced new or revised environmental standards. These findings prove that product innovation in response to environmental standards can create a competitive advantage where product commoditization has occurred, and that the trends in the price premiums for environmentally friendly attributes are not unique for CFC-free and energy-consumption-efficient products.

Keywords: Porter hypothesis; Environmental innovation; Hedonic price approach; POS data; CFC-free; Energy-consumption efficiency (search for similar items in EconPapers)
Pages: 22 pages
Date: 2014-07
New Economics Papers: this item is included in nep-com, nep-cse, nep-ene, nep-env, nep-ino and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:dp2014-30

Access Statistics for this paper

More papers in Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University 2-1 Rokkodai, Nada, Kobe 657-8501 JAPAN. Contact information at EDIRC.
Bibliographic data for series maintained by Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University ().

 
Page updated 2025-03-22
Handle: RePEc:kob:dpaper:dp2014-30