Informative advertising by an environmental group

Pim Heijnen

Journal of Economics, 2013, vol. 108, issue 3, 249-272

Abstract: Consuming a product does not (necessarily) reveal the environmental damage it may cause. In terms of environmental damage, most goods are credence goods. Therefore, advertising and pricing rarely can transmit such information effectively to consumers. This article considers the scope with which an environmental group (EG) can signal this information to consumers via advertising and campaigning. Although an EG can inform the public, the welfare effects are ambiguous. Therefore, the EG may not have an incentive to acquire information about the firm’s production practices. However, when the firm chooses the level of environmental damage and the EG chooses whether to acquire information, there exists a mixed-strategy equilibrium for some parameter values, such that the EG acquires information, and the threat of advertising causes the firm to produce an environmentally friendly good. Copyright The Author(s) 2013

Keywords: Environmental group; Environmental quality; Monopoly; Informative advertising; Asymmetric information; Information acquisition; L12; L30; Q50 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00712-012-0284-6 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Informative advertising by an environmental group (2007)
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:kap:jeczfn:v:108:y:2013:i:3:p:249-272

DOI: 10.1007/s00712-012-0284-6

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).