Sustainable Marketing: Can Retailers’ Profit-Motivated Consumer Education Enhance Green R&D and Production?

Drawing from practices at Walmart, we model a supply chain where the manufacturer conducts product R&D while the retailer distributes products to two distinct consumer segments: green-conscious consumers who translate environmental principles into purchasing decisions, and non-green-conscious consumers who are deterred by perceived high costs and information deficits. The retailer engages in green education targeted at non-green-conscious consumers, providing clear product explanations to improve their willingness to pay for sustainable products, though this education is motivated by profit maximization rather than altruistic environmental responsibility. Our analysis reveals that while retailer green education can boost product R&D and adoption under certain conditions, this creates a ‘consumer education paradox’—a situation where green education could further enhance product R&D and adoption, but the retailer forgoes it because doing so does not contribute to profit. This occurs because profit-driven retailers limit education to self-beneficial ranges, creating tension between individual profit maximization and overall environmental performance. We then propose two government subsidy solutions—green product quantity subsidies and product R&D subsidies—to resolve this paradox. Both effectively alleviate the tension, but green innovation subsidies, despite requiring greater government investment, consistently outperform in fostering innovation and adoption, offering superior environmental outcomes.