Fighting over Environmental Salience

Stephan Eitel and Stefanie Y. Schmitt

No 247, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: When consumers prefer to buy goods with high environmental quality and firms differ in their environmental qualities, firms have incentives to fight over environ mental salience and thereby influence consumers’ attention to the environmental dimension of the goods. A green firm prefers environmental quality to be salient, while a brown firm prefers environmental quality to remain shrouded. We model the firms’ fight over salience as an advertising contest. We show that the firm with the competitive advantage invests more into the salience contest. Whether such a contest increases social welfare depends on the level of environmental differentiation and the marginal damage of emissions. In addition, we show that the contest is an (imperfect) substitute for emission taxes and subsidies and that minimum standards may increase emissions and decrease welfare.

Keywords: contest; emissions; environmental quality; environmental policies; salience. (search for similar items in EconPapers)
JEL-codes: D91 L13 L15 Q52 Q58 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2026-03
New Economics Papers: this item is included in nep-com, nep-ene and nep-env
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