{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

slides_12_may - 1 2 3 4 The pr oduct is bet t er qualit y...

Info icon This preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Why do people buy green products? 1 1. The product is better quality 2. The product is cheaper 3. Buying the product gives the consumer a “warm glow” 4. Buying the product sends out a positive signal about the consumer’s type (conspicuous consumption)
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
1. Better quality  Examples??? Why do people buy it? Heterogeneous tastes/needs Income – desire for quality rather than quantity More expensive, so why do firms sell it? Differentiate their product – make monopoly prices Greenwashing??? 2
Image of page 2
2. Cheaper Examples??? We expect that green should be the default, isn’t always Why??? Costs to changing – habits and information Given limited time and information and switching costs, it may be rational to “satisfice” rather than optimize. High upfront costs verse future benefits People have high discount rates i.e. impatient Eg Compact Florescent Lightbulb(CFL) Saves money but penetration in U.S. is low – 21% in CA in 2009 3
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
CFL vs incandescent Need to calculate present discounted value in order to compare What do we need to know? Upfront costs Intensity of usage Cost of usage (will this change over time?) Expected Lifetime Discount rate 4
Image of page 4
CFL vs Incandescent  75 Watt I ncandescent 19 Watt CFL Upfront cost $0.50 $5.00 Intensity of use 2.74 hours per day 2.74 hours per day Cost of electricity $0.1 per kwh $0.1 per kwh Cost of use 0.075*0.1=$0.0075 per hour 0.019*0.1=0.0019 per hour Lifetime 1,000 hours 10,000 hours Discount rate 5 % 5 % 5 Can we compare 1 CFL with 1 Incandescent?
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
CFL vs Incandescent 1 Incandescent lasts 1 year: 2.74*365=1,000 need 10 bulbs for 1 CFL Cost of using incandescent for 1 year = 1,000*0.0075=$7.5 Cost of using CFL for 1 year = 1,000*0.0019=$1.9
Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern