Carbon Footprinting and Pricing Under Climate Concerns

Journal of Marketing, forthcoming

Posted: 30 Jun 2019 Last revised: 19 May 2020

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: May 19, 2020

Abstract

This paper studies how organizations should design a product by choosing the carbon footprint and price in a market with climate concerns. The authors first show how the cost and demand effects of reducing the product carbon footprint determine the profit-maximizing design. Paradoxically, they find that stronger climate concerns may increase the overall, corporate carbon footprint, even if the product itself is greener. Next, the authors establish that offsetting carbon emissions can create a win-win outcome for the firm and climate if the cost of compensation is sufficiently low. Third, the authors show how regulation in the form of a cap-and-trade scheme or a carbon tax affects product design, firm profitability, and green technology adoption. Finally, the authors extend the analysis to a competitive scenario. Overall, these results help marketing professionals understand the subtle consequences of voicing climate concerns within an organization.

Keywords: Carbon footprint, carbon offsetting, climate impact, net-zero emissions, pricing

Suggested Citation

Bertini, Marco and Buehler, Stefan and Halbheer, Daniel and Lehmann, Donald R., Carbon Footprinting and Pricing Under Climate Concerns (May 19, 2020). Journal of Marketing, forthcoming. 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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