Competition between green and non-green products

Details

Supervisors

Maniquet, François

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation économétrie, à finalité approfondie

Abstract

enConsumers have increasingly chosen environmentally friendly products over conventional alternatives in response to a growing emphasis on sustainable living, prompting firms to offer green alongside traditional goods. However, the relative performance of green firms remains uncertain, as green technologies are typically dominated by higher costs. This study develops two models that incorporate heterogeneity in the green preferences and income levels of consumers to simulate competition between green and non‐green firms. In one model, consumers are assumed to be indifferent between green and non‐green products; in the other, all consumers strictly prefer green products. We find that within a certain price range, both green and non‐green firms can coexist in equilibrium. The increase of social norms favoring green consumption can boost green firms’ profitability relative to non‐green firms, whereas rising income levels alone are unlikely to achieve the same result.