Design for the Environment: A Quality-Based Model for Green Product Development

TLDR

Green product development addresses environmental issues through design and innovation, moving away from end‑of‑pipe solutions, and has attracted growing attention from customers, industries, and governments worldwide. The paper develops a quality‑based model to analyze the strategic and policy challenges of creating products that balance traditional and environmental attributes. The model applies conjoint analysis to capture consumer preferences, optimal product design and market segmentation to guide producers’ decisions on product mix, pricing, and quality, and evaluates how environmental standards influence economic and environmental outcomes. The study finds that interactions among consumer preferences, producer strategies, and regulatory standards can lead to outcomes where green product development and stricter environmental standards do not necessarily yield environmental benefits.

Abstract

Green product development, which addresses environmental issues through product design and innovation as opposed to the traditional end-of-pipe-control approach, is receiving significant attention from customers, industries, and governments around the world. In this paper we develop a quality-based model for analyzing the strategic and policy issues concerning the development of products with conflicting traditional and environmental attributes. On the demand side of the problem, we use the framework of conjoint analysis to structure the preferences of the ordinary and green customers. On the supply side, we apply the theories in optimal product design and market segmentation to analyze the producer's strategic decisions regarding the number of products introduced and their prices and qualities. On the policy side, we evaluate the effects of environmental standards on the economic and environmental consequences of green product development. By jointly considering the interactions among the customers' preferences, the producer's product strategies, and the environmental standards imposed by governments, we present some interesting findings that can be used to manage and regulate the development of green products. Two major findings show that green product development and stricter environmental standards might not necessarily benefit the environment.