Hedonic and environmental quality: A hybrid model of product differentiation |
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| Affiliation: | 1. Department of Economics, University of Bologna, Strada Maggiore 45, 40125 Bologna, Italy;2. Barcelona Institute of Economics (IEB), C/ J. M. Keynes 1-11, 08034 Barcelona, Spain;3. Department of Economics and Social Sciences, University of Rome “La Sapienza”, Italy;4. Department of Economics, University of Bologna, Piazza Scaravilli 2, 40126 Bologna, Italy;1. Department of Organization and Economics of Institutions, University of Graz, Universitätsstraße 15, 8010 Graz, Austria;2. Institute for Corporate Governance, Vienna University of Economics and Business, Welthandelsplatz 1, 1020 Vienna, Austria;3. Department of Business Administration, University of Vienna, Oskar-Morgenstern-Platz 1, 1090 Vienna, Austria;1. School of Economics and Management, North China Electric Power University, Beijing, 102206, China;2. Beijing Energy Development Research Center, Beijing,China;1. Aoyama Gakuin University, 4-4-25 Shibuya, Shibuya-ku, Tokyo 150-8366, Japan;2. Department of Economics, Pennsylvania State University, United States;1. China Academy of West Region Development, Zhejiang University, Hangzhou 310058, China;2. Christian-Albrecht University of Kiel/Institute for the World Economy, Kiel 24105, Germany;3. Department of Economics, Jinan University, Guangzhou, Guangdong 510632, China;4. Institute of Resource, Environment and Sustainable Development Research, Jinan University, Guangzhou, Guangdong 510632, China |
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| Abstract: | In this paper, we analyze how strategic competition between a green firm and a brown competitor develops when their products are differentiated along two dimensions: hedonic quality and environmental quality. The former dimension refers to the pure (intrinsic) performance of the good, whereas the latter dimension has a positional content: buying green goods satisfies the consumer's desire to be portrayed as a socially worthy citizen. We consider the case in which these quality dimensions are in conflict with each other so that the higher the hedonic quality of a good, the lower the corresponding environmental quality. We characterize the equilibrium configurations and discuss the policy implications deriving from our analysis. |
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| Keywords: | Hedonic quality Environmental quality Relative preferences |
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