Analyzing product greening spillovers in multi-product markets

Documented cases of sustainable initiatives of firms show that green efforts in one marketoften have spillover effects on other markets. The critical question is, how do firms harnessand respond to such market spillovers. To answer this, the paper examines two settingswhere, a firm operates in two different markets with spillovers and secondly, where it facesmarketplace competition. Spillovers can be positive or negative. Using an analytical approach,the paper examines pricing and greening strategies of a firm in these scenarios, conducts marketcomparisons, and examines specific conditions where the firm may not invest in greening. Thefindings show that under the threat of spillovers from competitor's green efforts, a focal firmincreases its greening efforts and prices. Further, the absence of consumer green sensitivityin the primary market does not deter a firm from greening, if spillovers exist. Under negativespillovers, a firm can still invest in positive green efforts if the negative spillover effect is belowa threshold. However, under competitive threat, a firm may lose competitive advantage as itscompetitor (with positive green spillovers), increases its greening efforts to compete in both the markets