City Research Online

Abstract

In this research, we examine to what extent, if any, natural environmental factors affect consumer purchase decisions regarding “green” products. We collect and combine several unique datasets to study the impact of air pollution on consumers’ choices of passenger vehicles in China. Exploiting cross-city variation, we find that air pollution levels negatively affect the sales of fuel-inefficient cars on average. This relationship, though, is U-shaped over the observed air pollution levels, in that fuel inefficient car purchases rise with air pollution beyond some threshold. Furthermore, a city’s income level is a significant factor in this non-monotonic relationship, in the sense that consumers of higher-income cities are less likely to suffer this reversal. All these results are consistent with the literature’s theoretical predictions of hope. The rich findings of our study yield important implications to both marketers and policy makers.

Publication Type:	Article
Additional Information:	Copyright © 2016, Springer Science Business Media New York
Publisher Keywords:	Green marketing, Choice model, Consumer behavior, Hope, Environmental economics, Applied industrial organization
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HN Social history and conditions. Social problems. Social reform
Departments:	Bayes Business School > Management
SWORD Depositor:	Symplectic Administrator

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