Hedonic and environmental quality: A hybrid model of product differentiation

Andrea Mantovani, Ornella Tarola and Cecilia Vergari ()

Resource and Energy Economics, 2016, vol. 45, issue C, 99-123

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.

Keywords: Hedonic quality; Environmental quality; Relative preferences (search for similar items in EconPapers)
JEL-codes: D62 H13 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:45:y:2016:i:c:p:99-123

DOI: 10.1016/j.reseneeco.2016.06.005

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