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Hedonic and environmental quality: A hybrid model of product differentiation

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  • Mantovani, Andrea
  • Tarola, Ornella
  • Vergari, Cecilia
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.

Suggested Citation

  • Mantovani, Andrea & Tarola, Ornella & Vergari, Cecilia, 2016. "Hedonic and environmental quality: A hybrid model of product differentiation," Resource and Energy Economics, Elsevier, vol. 45(C), pages 99-123.
    • Handle: RePEc:eee:resene:v:45:y:2016:i:c:p:99-123
    DOI: 10.1016/j.reseneeco.2016.06.005
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    2. Dorothée Brécard & Mireille Chiroleu-Assouline, 2020. "The market for "harmful component-free" products under pressure from the NGOs," PSE Working Papers halshs-02878337, HAL.
    3. Maccarrone, Giovanni & Marini, Marco A. & Tarola, Ornella, 2023. "Shop Until You Drop: the Unexpected Effects of Anticonsumerism and Environmentalism," FEEM Working Papers 330384, Fondazione Eni Enrico Mattei (FEEM).
    4. G. Ceccantoni & O. Tarola & C. Vergari, 2017. "Relative tax in a vertically differentiated market: the key role of consumers in environment," Working Papers wp2005, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Pires, Cesaltina Pacheco & Catalão-Lopes, Margarida & Jorge, Sílvia Ferreira & Garcês, Pedro, 2024. "Quality-price choices and market configurations when location matters," Economic Modelling, Elsevier, vol. 135(C).
    6. Hamid Hamoudi & Carmen Avilés-Palacios, 2023. "Product Sustainability and Consumer Environmental Awareness in Differentiated Markets," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 29(4), pages 277-291, November.
    7. Charu Grover & Sangeeta Bansal, 2021. "Effect of green network and emission tax on consumer choice under discrete continuous framework," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 23(4), pages 641-666, October.
    8. Dorothée Brécard & Mireille Chiroleu-Assouline, 2024. "Information campaigns and ecolabels by environmental NGOs: Effective strategies to eliminate environmentally harmful components?," PSE-Ecole d'économie de Paris (Postprint) hal-04592469, HAL.
    9. Marco A. Marini & Ornella Tarola & Jacques-François Thisse, 2020. "Is Environmentalism the Right Strategy to Decarbonize the World?," Working Papers 2020.31, Fondazione Eni Enrico Mattei.
    10. Stefano Castriota & Alessandro Fedele, 2021. "Does Excellence Pay Off? Theory and Evidence from the Wine Market," BEMPS - Bozen Economics & Management Paper Series BEMPS77, Faculty of Economics and Management at the Free University of Bozen.
    11. Jean J. Gabszewicz & Ornella Tarola, 2021. "Introduction to the special issue: green economy and environmental policies in oligopoly markets," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(1), pages 1-4, March.
    12. Hamid Hamoudi & Carmen Avilés-Palacios, 2022. "Awareness Campaigns in a Horizontally Differentiated Market with Environmentally Conscious Consumers, Private Versus Public Duopoly," IJERPH, MDPI, vol. 19(19), pages 1-21, October.
    13. Burani, Nadia & Mantovani, Andrea, 2020. "Non-linear pricing and conscious consumption," International Journal of Industrial Organization, Elsevier, vol. 68(C).
    14. Luca Lambertini & Andrea Mantovani & Cecilia Vergari, 2021. "Green monopoly and downward leapfrogging," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 48(1), pages 93-103, March.

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    More about this item

    Keywords

    Hedonic quality; Environmental quality; Relative preferences;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization

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