Optimal dynamic pricing and green design under carbon-reduction competition considering social influence

¹ Business School, University of Shanghai for Science and Technology, Shanghai 200093, P.R. China
² Love School of Business, Elon University, Elon, NC 27244, USA

^* Corresponding author: xliu3@elon.edu

Received: 16 October 2023
Accepted: 6 December 2024

Abstract

The concept of green design is a design idea that focuses on environmental protection and sustainability. Green design has become the core competitiveness of enterprises. This paper explores competitive pricing and green design strategy of firms in the context of carbon reduction. In the analysis of the effect of social influence, consumer environmental awareness is also considered. And two research scenarios are examined: Price competition in single carbon reduction scenario; Competition in pricing and green level under dual carbon reduction scenario. The results indicate that social influence and consumer environmental awareness interactively and significantly affect corporate decisions; Social influence positively promotes firms’ profit and is not always disadvantageous for competitors’ profit; In equilibrium, when one firm makes a green transformation, it achieves the win-win situation of not only improving environmental performance but also maximizing economic benefits. However, the induced environmental improvements and economic benefits of competitive enterprises are not necessarily ideal. The study results provide optimal strategies for competitive and environmental actions of enterprises, and also provide management insight for the sustainable development of enterprises.