Optimisation of carbon emission reduction in a competitive market with varying saturation and eco-conscious consumers

Baozhuang Niu, Nan Zhang, Fengfeng Xie, Hailun Zhang

Research output: Journal PublicationArticlepeer-review

2 Citations (Scopus)


Non-saturated markets such as high-tech markets are attracting more and more eco-conscious consumers. Their utility can be increased by firms’ investment in carbon reduction, so the overall demand can be expanded without intensifying the market competition too much. In this paper, we build a two-stage-N-firm optimisation model by assuming firms’ products are horizontally differentiated and may engage in multi-dimensional competition. We analyze three scenarios: (1) Benchmark of price-only competition, (2) Two-dimensional ‘price + investment effort’ competition, and (3) N-firm circular differentiated competition. We find that consumers’ high eco-awareness may lead firms to lower investment levels for carbon emission reduction. When the market is sufficiently saturated, we reveal that a Prisoner’s Dilemma will occur where firms are trapped in investment-effort competition, so their profits are damaged. We further investigate the environmental performance and the social welfare, finding that consumers’ high eco-awareness may render the environment worse and undermine the social welfare.

Original languageEnglish
Number of pages24
JournalInternational Journal of Production Research
Publication statusPublished Online - 10 Aug 2023
Externally publishedYes


  • Eco-conscious consumers
  • Green investment
  • Horizontally differentiated products
  • Market saturation
  • Multi-dimensional competition

ASJC Scopus subject areas

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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