American Economic Journal:
Economic Policy
ISSN 1945-7731 (Print) | ISSN 1945-774X (Online)
Advertising and Environmental Stewardship: Evidence from the BP Oil Spill
American Economic Journal: Economic Policy
vol. 12,
no. 1, February 2020
(pp. 33–61)
(Complimentary)
Abstract
This paper explores whether private markets can incentivize environmental stewardship. We examine the consumer response to the 2010 BP oil spill and test how BP's investment in the 2000–2008 "Beyond Petroleum" green advertising campaign affected this response. We find evidence consistent with consumer punishment: BP station margins and volumes declined by 2.9 cents per gallon and 4.2 percent, respectively, in the month after the spill. However, pre-spill advertising significantly dampened the price response, and may have reduced brand switching by BP stations. These results indicate that firms may have incentives to engage in green advertising without investments in environmental stewardship.Citation
Barrage, Lint, Eric Chyn, and Justine Hastings. 2020. "Advertising and Environmental Stewardship: Evidence from the BP Oil Spill." American Economic Journal: Economic Policy, 12 (1): 33–61. DOI: 10.1257/pol.20160555Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
- M37 Advertising
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q56 Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
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