Green Product Development with Consumer Heterogeneity under Horizontal Competition

Bing Xu, Qingyun Xu, Qiushi Bo and Qifan Hu
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Bing Xu: School of Management, Nanchang University, Nanchang 330031, China
Qingyun Xu: School of Management, Nanchang University, Nanchang 330031, China
Qiushi Bo: School of Management, Nanchang University, Nanchang 330031, China
Qifan Hu: School of Business Administration, Nanchang Institute of Technology, Nanchang 330099, China

Sustainability, 2018, vol. 10, issue 6, 1-20

Abstract: In this paper, we explore the pricing and greenness issues of two competitive firms without and with consumer heterogeneity. We derive and compare the optimal solutions and profits employed by firms under different scenarios. Then, we identify the effects of consumer heterogeneity under different competition intensities. The analytical results reveal that if market competition is at a relatively low level, we find that: (i) when the greenness sensitivity of consumers with no preference is sufficiently small, more consumers have high environmental awareness, and companies easily achieve their environmental goals as well as economic goals; (ii) when the greenness sensitivity of consumers with no preference is at a medium level, as the fraction of consumers with high environmental awareness increases, and the firm might achieve economic goals at the cost of reducing environmental goals; and (iii) when the greenness sensitivity of consumers with no preference is at a high level, the fraction of consumers with high environmental awareness increases, but firms might have more difficulty achieving their environmental and economic goals. On the other hand, if the market competition is at a relatively high level, the presence of consumer heterogeneity can help improve environmental goals, but make achievement of economic goals difficult.

Keywords: greenness; consumer heterogeneity; market competition; economic goals; environmental goals (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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