Can Rising Eco-sensitivity Hurt Sustainability? Eco-impact of Durable Goods Innovations.

This article develops a dynamic two-period economic model to analyze the environmental impact of durable goods innovations amid rising consumer eco-sensitivity, distinguishing between functional innovations (which improve product features without reducing in-use harm) and use-efficiency innovations (which reduce in-use environmental harm). It finds that increasing eco-sensitivity generally reduces total environmental harm and firm profits for functional and low-efficiency innovations by discouraging upgrades, while it increases both profits and reduces harm for high-efficiency innovations by accelerating adoption. However, for moderate-efficiency innovations—where the reduction in in-use harm is close to but less than replacement harm—increasing eco-sensitivity can paradoxically increase total eco-harm due to firms’ strategic pricing that shifts sales toward less efficient products in the less eco-sensitive period. The study further shows that trade-in discounts and recycling programs can mitigate this unintended effect, improving both profitability and environmental outcomes. These findings highlight complex interactions among consumer behavior, firm pricing strategies, and eco-sensitivity, offering insights for policymakers, firms, and environmental advocates on when and how to promote consumer education and sustainable practices in durable goods markets.