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Good and bad increases in ecological awareness: environmental differentiation revisited

García-Gallego, A. and Georgantzis, N. (2011) Good and bad increases in ecological awareness: environmental differentiation revisited. Strategic Behavior and the Environment, 1 (1). pp. 71-88. ISSN 19440138

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To link to this item DOI: 10.1561/102.00000001

Abstract/Summary

We analyze a vertically differentiated market, assuming that conventional and green firms' products have different impacts on the environment. Heterogeneous consumers choose to be supplied by a conventional or a green firm, depending on their extra willingness to pay for a green product and the relative prices of the products in the market. We show that environmental awareness campaigns may have a negative impact on total welfare. This possibility is shown to exist without consumer misperceptions about the quality of green products and ruling out changes in the coverage and the structure of the market. Surprisingly, both conventional and green firms may benefit from heterogeneity-enhancing awareness campaigns, while social welfare is more likely to be enhanced by heterogeneity-reducing ones.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development > Economic and Social Sciences Division > Food Economics and Marketing (FEM)
ID Code:34776
Publisher:now publishers

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