Hoping Grey Goes Green: Air Pollution's Impact on Consumer Automobile Choices

21 Pages Posted: 2 Jan 2016 Last revised: 4 Jan 2016

See all articles by Jia Li

Jia Li

Purdue University - Krannert School of Management

Charles C. Moul

Miami University of Ohio - Department of Economics

Wanqing Zhang

Purdue University - Department of Management

Date Written: November 18, 2015

Abstract

This paper examines to what extent, if any, natural environmental factors affect consumer purchase decisions regarding “green” products. We collect and combine several unique datasets to study the impact of air pollution on consumers’ choices of passenger vehicles in China. Exploiting cross-city variation, we find that air pollution levels negatively affect the sales of fuel-inefficient cars on average. This relationship, though, is U-shaped over the observed air pollution levels, in that fuel-inefficient car purchases rise with air pollution beyond some threshold. Furthermore, a city’s income level is a significant factor in this non-monotonic relationship, in the sense that consumers of higher-income cities are less likely to suffer this reversal. All these results are consistent with the literature’s theoretical predictions of hope. The rich findings of our study yield important implications to both marketers and policy makers.

Keywords: Green marketing, hope, choice model, consumer behavior, environmental economics

Suggested Citation

Li, Jia and Moul, Charles C. and Zhang, Wanqing, Hoping Grey Goes Green: Air Pollution's Impact on Consumer Automobile Choices (November 18, 2015). Available at SSRN: https://ssrn.com/abstract=2710189 or http://dx.doi.org/10.2139/ssrn.2710189

Jia Li (Contact Author)

Purdue University - Krannert School of Management ( email )

403 West State Street
West Lafayette, IN 47907
United States

Charles C. Moul

Miami University of Ohio - Department of Economics ( email )

Farmer School of Business
Oxford, OH 45056
United States

Wanqing Zhang

Purdue University - Department of Management ( email )

403 W State
Krannert Building
West Lafayette, IN 47907-1310
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
45
Abstract Views
425
PlumX Metrics