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Design for the Environment: A Quality-Based Model for Green Product Development

Author

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  • Chialin Chen

    () (School of Business and Economics, Wilfrid Laurier University, Waterloo, Ontario, Canada N2L 3C5)

Abstract

Green product development, which addresses environmental issues through product design and innovation as opposed to the traditional end-of-pipe-control approach, is receiving significant attention from customers, industries, and governments around the world. In this paper we develop a quality-based model for analyzing the strategic and policy issues concerning the development of products with conflicting traditional and environmental attributes. On the demand side of the problem, we use the framework of conjoint analysis to structure the preferences of the ordinary and green customers. On the supply side, we apply the theories in optimal product design and market segmentation to analyze the producer's strategic decisions regarding the number of products introduced and their prices and qualities. On the policy side, we evaluate the effects of environmental standards on the economic and environmental consequences of green product development. By jointly considering the interactions among the customers' preferences, the producer's product strategies, and the environmental standards imposed by governments, we present some interesting findings that can be used to manage and regulate the development of green products. Two major findings show that green product development and stricter environmental standards might not necessarily benefit the environment.

Suggested Citation

  • Chialin Chen, 2001. "Design for the Environment: A Quality-Based Model for Green Product Development," Management Science, INFORMS, vol. 47(2), pages 250-263, February.
  • Handle: RePEc:inm:ormnsc:v:47:y:2001:i:2:p:250-263
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    File URL: http://dx.doi.org/10.1287/mnsc.47.2.250.9841
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    References listed on IDEAS

    as
    1. Richard H. Thaler, 2008. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
    2. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    3. Rajeev Kohli & R. Sukumar, 1990. "Heuristics for Product-Line Design Using Conjoint Analysis," Management Science, INFORMS, vol. 36(12), pages 1464-1478, December.
    4. K. Sridhar Moorthy, 1984. "Market Segmentation, Self-Selection, and Product Line Design," Marketing Science, INFORMS, vol. 3(4), pages 288-307.
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