In this paper we analyse a setup where consumers are heterogeneous in the perception of environmental quality. The equilibrium is verified in a setting with horizontal and vertical (green) differentiation. Profits are increasing in the misperception of quality, while, the investment in green...

The environmental pollution and climate change caused by rapid industrialization and economic growth have become worldwide concerns. In order to alleviate environmental pressures and seek sustainable development pathways, green consumption has become a focal point of attention. However, the...