Price and greenness competition between duopoly firms considering consumer premium payments

Yantao Ling () and Jing Xu ()
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Yantao Ling: Chongqing University
Jing Xu: Chongqing University

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2021, vol. 23, issue 3, No 43, 3853-3880

Abstract: Abstract Growing concerns regarding green product has accompanied increased environmental protection awareness. How should competitive firms design the price and greenness to match consumer premium payments and how does the behavior of firms and consumers affect the environment are still in discussion. In this study, we employ a duopoly model to investigate the price and greenness for firms considering consumer premium payments. We then discuss which firm invests in green technology and adopts environmental materials that can improve the environmental friendliness in different technical investment ratios. The results show that market equilibrium depends on firms’ technical investment ratios and each equilibrium needs consumer premium payments higher than some threshold. Second, higher consumer premium payments can benefit two firms, and at least one firm will increase the greenness of the product. Third, consumer premium payments, technical investment ratio, research and development coefficient, and environmental materials cost play important roles in the environmental friendliness. These results provide a reference for the government’s policy design on improving environment friendliness.

Keywords: Competitive equilibrium; Environmental friendliness greenness; Premium payments; Willingness to pay (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10668-020-00747-5

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