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Reprint of “The impact of development cost on product line design and its environmental performance”

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  • Zhang, Yibin
  • Hafezi, Maryam
  • Zhao, Xuan
  • Shi, Victor

Abstract

To address environmental problems such as pollution and climate change, many firms have endeavoured to develop green products with higher environmental quality, which includes dimensions like energy efficiency and recyclability. However, environmental quality is oftentimes associated with significant development cost. In this paper, we build and analyse mathematical models to understand how development cost affects a firm’s product line design when there are two consumer segments with different willingness to pay for environmental quality. The firm can employ the mass marketing strategy and develop one standard product for all consumers, or employ the market segmentation strategy and develop two differentiated products for the two consumer segments separately. We show how various parameters, especially the development cost, affect the firm’s choice on the product line length, or equivalently, between the mass marketing and market segmentation strategies, and the consequent profit and environmental performance. Furthermore, we identify different scenarios where the objective of maximizing profit may or may not lead to better environmental performance.

Suggested Citation

  • Zhang, Yibin & Hafezi, Maryam & Zhao, Xuan & Shi, Victor, 2017. "Reprint of “The impact of development cost on product line design and its environmental performance”," International Journal of Production Economics, Elsevier, vol. 194(C), pages 126-134.
    • Handle: RePEc:eee:proeco:v:194:y:2017:i:c:p:126-134
    DOI: 10.1016/j.ijpe.2017.11.005
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    References listed on IDEAS

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    2. Zhang, Juan & Huang, Jian, 2021. "Vehicle product-line strategy under government subsidy programs for electric/hybrid vehicles," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 146(C).
    3. Hafezi, Maryam & Zolfagharinia, Hossein, 2018. "Green product development and environmental performance: Investigating the role of government regulations," International Journal of Production Economics, Elsevier, vol. 204(C), pages 395-410.
    4. Zhaofu Hong & Hao Wang & Yeming Gong, 2019. "Green product design considering functional-product reference," Post-Print hal-02312293, HAL.
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    6. Zolfagharinia, Hossein & Zangiabadi, Maryam & Hafezi, Maryam, 2023. "How much is enough? Government subsidies in supporting green product development," European Journal of Operational Research, Elsevier, vol. 309(3), pages 1316-1333.
    7. Zeeshan Ullah, 2021. "Sustainable product attributes and firm performance: The moderating role of marketing resource intensity," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 4107-4120, December.
    8. Wang, Liangliang & Yu, Junli & Chan, Kam C., 2021. "Product line transformation, foreign sales, and firm value: Evidence from COVID-19 pandemic governance in urban China," Research in International Business and Finance, Elsevier, vol. 58(C).
    9. Zhou, Pin & Xu, He & Chen, Jiguang, 2020. "Value of down-conversion policy in a vertical differentiated co-production system," International Journal of Production Economics, Elsevier, vol. 228(C).
    10. Niu, Baozhuang & Li, Qiyang & Mu, Zihao & Chen, Lei & Ji, Ping, 2021. "Platform logistics or self-logistics? Restaurants’ cooperation with online food-delivery platform considering profitability and sustainability," International Journal of Production Economics, Elsevier, vol. 234(C).
    11. Yong He & Peng He & Feifei Xu & Chunming (Victor) Shi, 2019. "Sustainable tourism modeling: Pricing decisions and evolutionarily stable strategies for competitive tour operators," Tourism Economics, , vol. 25(5), pages 779-799, August.
    12. Hong, Zhaofu & Wang, Hao & Gong, Yeming, 2019. "Green product design considering functional-product reference," International Journal of Production Economics, Elsevier, vol. 210(C), pages 155-168.

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