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Dynamic Games and Applications Seminar

Strategic Pricing and Investment in Environmental Quality by an Incumbent Facing a Greenwasher Entrant


Apr 20, 2023   11:00 AM — 12:00 PM

Can Baris Cetin HEC Montréal, Canada

Can Baris Cetin

Presentation on YouTube.

In this study, we analyze the effect of greenwashing on firms’ strategies and outcomes and consumers. We consider a two-stage game where a monopolist makes pricing and environmental quality investment in the first stage and competes with an entrant in the second stage. The incumbent is a green firm and does not overrate the environmental quality of its product, while the entrant may be tempted by greenwashing. We assume that only inexperienced consumers, that is, consumers who did not purchase the product in the first period, can be lured by greenwashing. Consequently, our model captures two important dynamic features, namely, the change in the competitive structure, and the presence of a “learning” effect in the market. We investigate the conditions that make greenwashing profitable for the entrant, how the incumbent responds to greenwashing, and the impact of greenwashing on the environment and customers.
Joint work with Arka Mukherjee and Georges Zaccour.

Georges Zaccour organizer
Ke Jiang organizer
Fatemeh Zand organizer


Online meeting
Montréal Québec

Associated organization

Research Axis

Research application