Product line design and low-carbon investment strategies with consumer environmental concern

As environmental consciousness among consumers grows, firms are recognizing the importance of adopting carbon abatement technology as a crucial strategy to meet the rising demand for low-carbon products. Our study specifically examines the influence of a low-carbon investment strategy on a firm's product line design, aiming to better align with consumer needs. Considering the impact of low-carbon investments and consumer environmental concern on the product line design has not been adequately examined in previous research. To fill this gap in research, our study proposes a model of a firm that designs the product line while determining the price and quality of each product. Our findings indicate that the single-product strategy is strictly inferior to the product line strategy when considering the low-carbon investment. This implies that the conventional wisdom that either the single-product strategy or the product line strategy could be an equilibrium strategy does not hold. Intuitively, the firm's low-carbon investment in a specific product segment solely impacts the corresponding segment's product quality and pricing decisions. While this intuition holds for the low-carbon investment strategy solely targeting high-end products, it does not apply when the low-carbon investment strategy applies solely to low-end products. Furthermore, our results show that the firm adopts the low-carbon investment strategy and traditional (without low-carbon investment) strategy when consumer environmental concern is relatively high and low, respectively. Finally, our results show that any of the four strategies (the traditional strategy and the low-carbon investment strategies for only low-end products, only high-end products, and both segments) could be optimal, depending on certain conditions, in the product line scenario.

Automated summary

With the growing environmental consciousness among consumers, firms are realizing the importance of adopting carbon abatement technology as a key strategy to meet the increasing demand for low-carbon products. This study examines the impact of a low-carbon investment strategy on a firm's product line design, aiming to better align with consumer needs. The findings suggest that the single-product strategy is inferior to the product line strategy when considering the low-carbon investment. Furthermore, the firm adopts different strategies based on the level of consumer environmental concern.