Pricing Ecological Products under Duopoly

Abstract

The construction of ecological civilization has put forward new requirements for the market-oriented reform of ecological products, and pricing is the most effective mechanism for marketization. This paper actively expands on the definition of ecological products and considers two game models to compare different consumption preferences and tax/subsidy policies. The results show that, under a static game, ecological products pose a disadvantage, which can lead to negative profits. In a dynamic game, an ecological firm can obtain higher profits by virtue of the positive externalities of its products. Changes in subsidies and taxes can achieve the expected effect of policies, which may reduce the price of ecological products and thus improve competitiveness. Meanwhile, we found that tax policy regulation plays a more significant role than a supporting subsidy, but the ecological degree effect may be the opposite under extreme conditions. This research provides theoretical guidance for promoting the use of ecological products for environmental improvement.