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Price Competition and Product Differentiation When Consumers Care for the Environment

机译：消费者关心环境时的价格竞争和产品差异化

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Increasing environmental awareness may affect the pleasure of consuming a good for which an environment friendly substitute is available. In this paper, we investigate the market implication of product differentiation when customers are concerned about environmental aspects of the good. We use the spatial duopoly model to determine how environmental concern affects prices, product characteristics and market shares of the competing firms. Our analysis is based on a two-stage game, where at the first stage each firm chooses the characteristic of its product. At the second stage, each firm chooses its price. Equilibrium prices and market shares are affected by consumer awareness of the environment and by the higher costs for producing those goods. As for the Nash equilibria in the characteristics, we find three equilibria depending on the parameter constellation. In order to find out whether the market functions in an optimal way, we determine the choice of environmental characteristics by a welfare maximizing authority. The objective of the paper is to understand the environmental quality choices facing firms and to provide policies that would align private choices with the social optimum.
机译：环保意识的增强可能会影响消费环境友好替代品的乐趣。在本文中，我们研究了当客户关注商品的环境方面时，产品差异化的市场影响。我们使用空间双头垄断模型来确定环境问题如何影响竞争企业的价格，产品特征和市场份额。我们的分析基于两个阶段的博弈，其中每个公司在第一阶段都选择其产品的特征。在第二阶段，每个公司选择其价格。消费者对环境的意识以及生产这些产品的较高成本会影响均衡价格和市场份额。至于特征的纳什均衡，我们根据参数星座图找到三个均衡。为了确定市场是否以最佳方式运行，我们由福利最大化机构确定环境特征的选择。本文的目的是了解公司面临的环境质量选择，并提供使私人选择与社会最优目标保持一致的政策。

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