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Hoping grey goes green: air pollution’s impact on consumer automobile choices

Author

Listed:
  • Jia Li

    () (Purdue University)

  • Charles C. Moul

    () (Miami University)

  • Wanqing Zhang

    () (Purdue University)

Abstract

Abstract This paper examines to what extent, if any, natural environmental factors affect consumer purchase decisions regarding “green” products. We collect and combine several unique datasets to study the impact of air pollution on consumers’ choices of passenger vehicles in China. Exploiting cross-city variation, we find that air pollution levels negatively affect the sales of fuel-inefficient cars on average. This relationship, though, is U-shaped over the observed air pollution levels, in that fuel-inefficient car purchases rise with air pollution beyond some threshold. Furthermore, a city’s income level is a significant factor in this non-monotonic relationship, in the sense that consumers of higher-income cities are less likely to suffer this reversal. All these results are consistent with the literature’s theoretical predictions of hope. The rich findings of our study yield important implications to both marketers and policy makers.

Suggested Citation

  • Jia Li & Charles C. Moul & Wanqing Zhang, 2017. "Hoping grey goes green: air pollution’s impact on consumer automobile choices," Marketing Letters, Springer, vol. 28(2), pages 267-279, June.
  • Handle: RePEc:kap:mktlet:v:28:y:2017:i:2:d:10.1007_s11002-016-9405-2
    DOI: 10.1007/s11002-016-9405-2
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    References listed on IDEAS

    as
    1. Chen, Yuyu & Jin, Ginger Zhe & Kumar, Naresh & Shi, Guang, 2013. "The promise of Beijing: Evaluating the impact of the 2008 Olympic Games on air quality," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 424-443.
    2. Steven T. Berry & Joel Waldfogel, 1999. "Free Entry and Social Inefficiency in Radio Broadcasting," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 397-420, Autumn.
    3. Noah J. Goldstein & Robert B. Cialdini & Vladas Griskevicius, 2008. "A Room with a Viewpoint: Using Social Norms to Motivate Environmental Conservation in Hotels," Journal of Consumer Research, Oxford University Press, vol. 35(3), pages 472-482, March.
    4. Liran Einav, 2007. "Seasonality in the U.S. motion picture industry," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 127-145, March.
    5. Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
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