Influence of Greenwashing Strategy on Pricing: A Game-Theoretical Model for Quality Heterogeneous Enterprises

Abstract

Greenwashing behaviors refer to the performance that enterprises claim environmental protection, but their words and actions are inconsistent. The greenwashing strategy has both short-term benefits and negative effects for corporations. In this paper, a model of competition between two companies with different product quality is constructed. This paper explores how the greenwashing strategy of brown enterprises with inferior quality affects the pricing and profits of traditional enterprises without greenwashing motivation. The results show that: (1) the price of greenwashing enterprises is unimodal. Greenwashing companies will improve product quality while reducing prices to ensure a growing market demand. (2) Traditional enterprises fail to regain the market by relying on price competition, and it is more important to reduce the success rate of greenwashing. (3) Only by reducing the success rate of greenwashing, will greenwashing companies lose their greenwashing benefits, and traditional enterprises can regain market shares.