Entry Facilitation by Environmental Groups

We consider a model of vertical product differentiation where consumers care about the environmental damage their consumption causes. An environmental group is capable of increasing consumers' environmental concern via a costly campaign. We show that the prospect of such a campaign can induce e...

Full description

Saved in:
Bibliographic Details
Published in:Environmental & resource economics 2009-08, Vol.43 (4), p.457-472
Main Authors: van der Made, Allard, Schoonbeek, Lambert
Format: Article
Language:English
Subjects:
Advertising
Competition
Consumers
Consumption
D40
Duopoly
Economic Policy
Economics
Economics and Finance
Entry
Environmental degradation
Environmental Economics
Environmental groups
Environmental Law/Policy/Ecojustice
Environmental Management
Environmental movements
Environmental organizations
Environmental perception
Environmental policy
Industrial pollution
Interest groups
L31
M37
Market entry
Persuasive advertising
Pollution
Product differentiation
Public service advertising
Q50
Regulation
Studies
Toy industry
Vertical product differentiation
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We consider a model of vertical product differentiation where consumers care about the environmental damage their consumption causes. An environmental group is capable of increasing consumers' environmental concern via a costly campaign. We show that the prospect of such a campaign can induce entry by a firm that is able to employ a cleaner technology than the one used by the incumbent. We further demonstrate that the subsequent competition can lead to an adverse effect on aggregate pollution, i.e. the decline in average industry pollution per product is offset by the increase in aggregate production.
ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-008-9239-3