Environmental Product Differentiation and Environmental Awareness
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Universidad de La Rioja
info
ISSN: 0924-6460
Year of publication: 2007
Volume: 36
Issue: 2
Pages: 237-254
Type: Article
More publications in: Environmental and Resource Economics
Abstract
In this paper, we have considered a duopolistic model of environmental product differentiation with two types of consumers (green and brown) to analyze how environmental awareness affects the environment. "Green" consumers value the physical and environmental attributes of the good they purchase while "brown" consumers only value the physical attributes. We find that more environmental awareness may not be good news for the environment as the firm that produces the good without environmental attributes may increase its sales. The result depends on the degree of product differentiation and the cost to achieve it. Social welfare can also be inversely related to environmental awareness if the negative environmental effect dominates the positive market effect. © 2006 Springer Science+Business Media, Inc.