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Advertising and Environmental Stewardship: Evidence from the BP Oil Spill

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  • Lint Barrage
  • Eric Chyn
  • Justine Hastings

Abstract

This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000-2008 “Beyond Petroleum” green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship.

Suggested Citation

  • Lint Barrage & Eric Chyn & Justine Hastings, 2014. "Advertising and Environmental Stewardship: Evidence from the BP Oil Spill," NBER Working Papers 19838, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19838
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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L0 - Industrial Organization - - General
    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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