Carbon Footprinting and Pricing Under Climate Concerns

28 Pages Posted: 30 Jun 2019 Last revised: 3 Jul 2019

See all articles by Marco Bertini

Marco Bertini

ESADE - Ramon Llull University

Stefan Buehler

University of St. Gallen - SEPS: Economics and Political Sciences

Daniel Halbheer

HEC Paris - Marketing

Donald R. Lehmann

Columbia Business School - Marketing

Date Written: June 28, 2019

Abstract

This paper studies how marketers should design and price a product in the face of climate concerns. We first derive the profit-maximizing carbon footprint and price, and examine how these respond to stronger climate concerns by consumers. Next, we consider the impact of product-level decisions on the carbon emissions of the firm as a whole. Interestingly, we find that a firm can become a victim of its own success, as a greener product may boost sales to the point that overall emissions also increase. Finally, we analyze how government regulation in the form of a cap-and-trade scheme or a carbon tax affects product design and pricing, firm profitability, and the adoption of green technologies.

Keywords: Green marketing, product design, organizational carbon footprint, carbon regulation

Suggested Citation

Bertini, Marco and Buehler, Stefan and Halbheer, Daniel and Lehmann, Donald R., Carbon Footprinting and Pricing Under Climate Concerns (June 28, 2019). HEC Paris Research Paper No. MKG-2019-1344. Available at SSRN: https://ssrn.com/abstract=3411706 or http://dx.doi.org/10.2139/ssrn.3411706

Marco Bertini

ESADE - Ramon Llull University ( email )

Avinguda de la Torre Blanca, 59
Sant Cugat del Vall├Ęs, 08172
Spain

Stefan Buehler

University of St. Gallen - SEPS: Economics and Political Sciences ( email )

FGN-HSG
Varnbuelstr. 19
CH-9000 St. Gallen
Switzerland
+41-71-224-2303 (Phone)

Daniel Halbheer (Contact Author)

HEC Paris - Marketing ( email )

Paris
France

Donald R. Lehmann

Columbia Business School - Marketing ( email )

New York, NY 10027
United States

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