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Advertising and Environmental Stewardship: Evidence from the BP Oil Spill

Lint Barrage, Eric Chyn and Justine Hastings

American Economic Journal: Economic Policy, 2020, vol. 12, issue 1, 33-61

Abstract: This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000–2008 "Beyond Petroleum" green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship.

JEL-codes: D12 D83 G31 L71 M37 Q53 Q56 (search for similar items in EconPapers)
Date: 2020
Note: DOI: 10.1257/pol.20160555
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Working Paper: Advertising and Environmental Stewardship: Evidence from the BP Oil Spill (2014) Downloads
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