Component-free strategy of firms under pressure from the NGOs
Dorothée Brécard  1@  , Mireille Chiroleu-Assouline  2, 3@  
1 : LEAD, Univ. Toulon
Université du Sud - Toulon - Var
2 : PSE
PARIS SCHOOL OF ECONOMICS, Paris School of Economics
3 : Paris Jourdan Sciences Economiques  (PJSE)  -  Site web
Université Panthéon-Sorbonne : UMR8545, École normale supérieure - Paris, Institut National de la Recherche Agronomique, École des Hautes Études en Sciences Sociales, Ecole des Ponts ParisTech, Centre National de la Recherche Scientifique
48 boulevard Jourdan 75014 Paris -  France

There is a growing pressure of NGOs on firms to have them eliminate a component (as oil palm) harmful for the environment (as rainforests) from their products or to replacesuch a component with a sustainable substitute component the NGO certifies. Under which conditions NGO's pressure leads a firm to eliminate basic component in its product or, alternatively, to substitute a damaging component with the certified sustainable component? What are the ensuing effects on market structure? This paper addresses these issues using a model of two-dimensional vertical product differentiation.


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