Differentiation-Based Analysis of Environmental Management and Corporate Performance

Introduction Environmental deterioration make the societyconcern about the corporate environmental perform-ance, which urges more and more managers to intro-duce environmental management into their corporatestrategies. While most of the managers find them…

Differentiation-Based Analysis of Environmental Management and Corporate Performance

By building a duopoly model based on product differentiation, both of the clean firm's and the dirty firm's performances are studied under the assumptions that consumers have different preferences for the product environmental attributes, and that the product cost increases with the environmental attribute. The analysis results show that under either the case with no environmental regulation or that with a tariff levied on the dirty product, the clean firm would always get more profit. In addition, the stricter the regulation is, the more profit the clean firm would obtain. This can verify that from the view of product differentiation, a firm could improve its corporate competitiveness with environmental management.