Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 23, 2023 erstellt
Beschreibung:
Consumers’ growing concern for the environment has motivated firms to offer sustainable products in several categories. An exploratory survey shows that many consumers desire sustainable products and are willing to pay more for them, but some consumers dislike sustainable products and want to pay less for them. Using a theoretical model where consumers are heterogeneous in their preference for sustainable products and firms are horizontally differentiated, we investigate the strategic implications of sustainable consumption. First, our analysis shows that product valuation moderates the impact of consumer preference on price, yielding results that run counter to intuition. Second, irrespective of product valuation, we find that competing firms’ profits can decrease with consumers’ desire for sustainability but increase with consumers’ dislike for sustainability. Third, we clarify when and why regulation of product sustainability can backfire and reduce aggregate consumer welfare. Fourth, we show that competing firms could earn strictly lower profits if they offer a customized product for each consumer segment: a sustainable product for consumers who desire sustainability and a baseline product for those who dislike sustainability. Moreover, symmetric firms could adopt an asymmetric product strategy. Fifth, in contrast to the luxury goods literature, we show that snobbishness hurts the profits of firms offering sustainable luxury goods, despite motivating firms to increase prices. Finally, we find that firms’ profits can increase as consumers’ political orientation shifts to the right