Product Design and the Choice of Green Degree

Abstract

In the green market, there is no “one size fits all” product strategy. Consumers’ environmental awareness may motivate enterprise to adopt green technology and eco-friendly materials, and then bring the enterprise more profit and market share in some cases. Consumer environmental awareness is always characterized by the willingness to pay for a product in some papers. In this paper, we discuss one enterprise’s product strategy, when to produce two alternative products with different green degree considering all the possible technological parameter and the willingness to pay. We address the optimal decisions of the enterprise on the optimal green degree and price. Meanwhile, we also show the effect of eco-friendly materials on enterprise’s profit and environmental impact while environmental impact is the weighted green degree of products. Moreover, we investigate how to increase the beneficial effect or decrease the adverse effect on profit and environmental impact from the respective of enterprise and the government, respectively, in terms of using eco-friendly materials with the willingness to pay to vary. Numerical analysis is conducted to show the aforementioned relative results.