 On fraud and certification of green productionCarmen Arguedas and Esther Blanco Journal of Economics & Management Strategy, 2025, vol. 34, issue 2, 501-524 Abstract: We present a novel model of fraud and certification in green production. We focus on settings where firms decide between a green or a standard version of a product together with an advertising strategy that can include fraud. In addition, green firms can choose to certify their production to guarantee the truthfulness of their claims. This results in four production‐advertising possibilities (standard, genuine green, fraudulent green, and certified green), by which we provide new insights about the prevalence of fraud and certification. We characterize the perfect Bayesian equilibrium of the resulting game for given green production costs, certification costs, and consumers' willingness to pay for standard production, and we perform comparative statics for the main parameters of the resulting game. We find that changes in certification and green production costs affect consumers' beliefs differently, whereby increases in certification and decreases in green production costs can broaden the likelihood of fraud. These novel results are robust to different market structures and question the general desirability of public subsidies for promoting green production without accompanying certification. Date: 2025 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jemstr:v:34:y:2025:i:2:p:501-524 Ordering information: This journal article can be ordered from Access Statistics for this article More articles in Journal of Economics & Management Strategy from Wiley Blackwell |
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