Consumers often assume eco-friendly products cost more to make. Across six experiments, we show that this lay belief drives a powerful ‘price-green inference’: higher-priced green-labeled products are viewed as more environmentally friendly than identical lower-priced ones. The effect emerges in backpacks, detergents, and more, is mediated by perceived production cost, and disappears when consumers distrust a brand’s green claims. When price clashes with the belief, e.g., a cheaper “green” option is presented, people underrate its greenness, unless firms clearly explain cost-saving innovations. The findings alert marketers and policymakers that well-meant price cuts can backfire, but transparent communication can restore credibility and safeguard genuine, sustainable adoption.
Co-author (s): Prof. Sanjeev Tripathi, IIM Indore
Journal: Journal of Business Research
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