Impacts of green credit policies and information asymmetry: From market perspective. (March 2023)

• Record Type: Journal Article
• Authors: Li, Xin; Wu, Ming; Shi, Chunming; Chen, Yan
• Is Part Of: Resources policy. Volume 81(2023)
• Publication Date: 2023-03
• Subjects: Green credit policy -- Information asymmetry -- Green product preference -- Pricing strategy -- Mixed equilibrium; Mines and mineral resources -- Periodicals; Ressources minérales -- Périodiques; Ressources naturelles -- Gestion -- Périodiques; Environnement -- Politique gouvernementale -- Périodiques; 333.8
• DOI: 10.1016/j.resourpol.2023.103395
• Languages: English
• ISSNs: 0301-4207

Abstract

Abstract: Under green credit policies, green credit subsidies can be employed to provide differentiated credit services for manufacturers with varying eco-performance. Meanwhile, on the market side, due to the variety and complexity of associated technologies, it is difficult for customers to tell the green difference between competing products. Within this context, we investigate the effectiveness of governments' green credit policies under this green information asymmetry. Specifically, a two-stage duopoly game model is developed to analyze the strategic interaction among government, manufacturers, and customers. We find that when making greener products incurs insignificant additional costs, green interest subsidies are not necessary for greener manufacturers to gain a competitive edge because of the market preference for greener products. In addition, we find that customers' behavior impacts the effectiveness of market-oriented green credit policies. In particular, when customers are inclined to believe a high green difference exists, the greener manufacturer will be more likely to benefit from green interest subsidies. Based on the analysis results, the following policy recommendations are developed. When determining the level of green interest subsidies for competing products with varying greenness, the government should consider their cost differences. Moreover, to enhance the effectiveness of market-based green credit policies, a customer-oriented standard rating system can be established to facilitate ordinary customers in comparing competing green products. Highlights: The effectiveness of green credit policies is affected by customer behavior. Green interest subsidies are not always necessary for greener manufacturers. Green credit policies perform better when customers believe in green differences.